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RECEIVED 

OCT ii^ 1988 
LAW UeRARY 



The 
NORTH CAROLINA 

REGISTER 



IN THIS ISSUE 




CORRECTION 

FINAL DECISION LETTER 

PROPOSED RULES 

Administration 

Commerce 

Human Resources 

Insurance 

NRCD 

Secretary of State 

LIST OF RULES AFFECTED 

ISSUE DATE: OCTOBER 14, 1988 



Volume 3 • Issue 14 • Pages 607-686 



INFORMATION ABOUT THE NORTH CAROLINA REGISTER AND ADMINISTRATIVE CODE 



NORTH CAROLINA REGISTER 

The North Carolina Register is published bi-monthly 
and contains information relating to agency, executive, 
legislative and judicial actions required by or affecting 
Chapter 150B of the General Statutes. All proposed, ad- 
ministrative rules and amendments filedunder Chapter 
150B must be published in the Register. The Register 
will typically comprise appro.ximately fifty pages per 
issue of legal text. 

State law requires that a copy of each issue be pro- 
vided free of charge to each county in the state and to 
various state officials and institutions. The North 
Carolina Register is available by yearly subscription at 
a cost of ninety-five dollars ($95.00) for 24 issues. 

Requests for subscriptions to the Nortli Carolina 
Register should be directed to the Office of Ad- 
ministrative Hearings, P. 0. Drawer 1 1666, Raleigh, N. 
C. 27604, Attn: Subscriptions. 

ADOPTION, AMENDMENT, AND REPEAL OF 
RULES 

An agency intending to adopt, amend, or repeal a rule 
must first publish notice of the proposed action in the 
North Carolina Register. The notice must include the 
time and place of the public hearing; a statement of how 
public comments ma\' be submitted to the agency either 
at the hearing or otherwise; the text of the proposed 
rule or amendment; a reference to the Statutory 
Authority for the action and the proposed effective date. 

The Director of the Office of Administrative Hearings 
has authority to publish a summary, rather than the 
full text, of any amendment which is considered to be 
too lengthy. In such case, the full text of the rule con- 
taining the proposed amendment will be available for 
public inspection at the Rules Division of the Office of 
Administrative Hearings and at the office of the pro- 
mulgating agency. 

Unless a specific statute pro\'ides otherwise, at least 
30 days must elapse following publication of the pro- 
posal in the North Carohna Register before the agency 
may conduct the required public hearing and take ac- 
tion on the proposed adoption, amendment or repeal. 

When final action is taken, the promulgating agency 
must file any adopted or amended rule for appro\al by 
the Administrative Rules Review Commission. Upon ap- 
proval of ARRC, the adopted or amended rule must be 
filed with the Office of Administrative Hearings. If it 
differs substantially from the proposed form published 
as part of the public notice, upon request by the agen- 
cy, the adopted version will again be published in the 
North CaroU}ia Register. 

A rule, or amended rule cannot become effective 
earlier than the first day of the second calendar month 
after the adoption is filed with the Office of Ad- 
ministrative Hearings for publication in the NCAC. 

Proposed action on rules may be withdrawn by the 
promulgating agency at any time before final action is 
taken by the agency. 

TEMPORARY RULES 

Under certain conditions of an emergency' nature, 
some agencies ma>' issue temporary rules. A temporary 
rule becomes effecti\'e when adopted and remains in 



r 



effect for the period specified in the rule or 180 days^ 
whichever is less. An agency adopting a temporary rul 
must begin normal rule-making procedures on the per^ 
manent rule at the same time the temporary rule is 
adopted. 

NORTH CAROLINA ADMINISTRATIVE CODE 

The North Carolina Administrative Code (NCAC) is 
a compilation and index of the administrative rules of 
25 state agencies and 38 occupational licensing boards. 
The NCAC comprises approximately 15,000 letter size, 
single spaced pages of material of which approximate- 
ly 35'?o is changed annually. Compilation and publica- 
tion of the NCAC is mandated by G.S. 150B-63(b). 

The Code is divided into Titles and Chapters. Each 
state agency is assigned a separate title which is fur- 
ther broken down by chapters. Title 21 is designated 
for occupational licensing boards. 

The NCAC is available in two formats. 

(1) Single pages may be obtained at a minimum 
cost of two dollars and 50 cents ($2.50) for 10 
pages or less, plus fifteen cents ($0. 1 5) per each 
additional page. 

(2) The full publication consists of 52 volumes, 
totaling in excess of 15,000 pages. It is sup- 
plemented monthly with replacement pages. A 
one year subscription to the full publication in- 
cluding supplements can be purchased for 
seven hundred and fifty dollars ($750.00). Iry 
dividual volumes may also be purchased witl 
supplement service. Renewal subscriptions for 
supplements to the initial publication available. 

Requests for pages of rules or volumes of the NCAC 
should be directed to the Office of Administrative 
Hearings. 

NOTE 

The foregoing is a generalized statement of the pro- 
cedures to be followed. For specific statutory language, 
it is suggested that Articles 2 and 5 of Chapter 150B of 
the General Statutes be examined carefully. 

CITATION TO THE NORTH CAROLINA 
REGISTER 

The North Carolina Register is cited by volume, issue, 
page number and date. 1:1 NCR 101-201, April 1, 1986 

refers to Volume 1, Issue 1, pages 101 through 201 of 
the North Carolina Register issued on April 1, 1986. 



North Carolina Register. Published bi-monthly by 
the Office of Administrati\'e Hearings, P.O. 
Drawer 1 1666, Raleigh, North Carolina 27604, pur- 
suant to Chapter 150B of the General Statutes. 
Subscriptions ninety-five dollars ($95.00) per year. 
North Carolina Administrative Code. Published 
in looseleaf notebooks with supplement service by y 
the Office of Administrative Hearings, P.O. I 
Drawer 1 1666, Raleigh, North Carolina 27604, pur- 
suant to Chapter 150B of the General Satutes. 
Subscriptions se\'en hundred and fifty dollars 
($7^0.00). Individual volumes available. 



NORTH 
CAROLINA 
REGISTER 




Office of Administrative llearim^s 

r. O. Drawer 11666 

Raleii^h, SC 2761)4 

(919) 733 - 2678 



Robert A Mclott, 

Director 
James R. Scareella Sr., 

Deputy Director 
Molly Mason, 

Director A PA Services 



Staff: 

Ruby Creech, 

Publications Coordinator 
Teresa Kilpatnck, 

Editorial Assistant 
Jean Shirk)', 

Editorial A ssistanl 



ISSUE CONTENTS 



I. CORRECTION 
Labor 

Notice 607 

II. FINAL DECISION LETTER 

Voting Rights Act 608 

III. PROPOSED RULES 
Administration 

Human Relations (-ouncil 609 

Commerce 

Departmental Rules 612 

Seafood Industnal Park 

Authority 613 

Human Resources 

Facility Scr\'ices 614 

Health Ser\ices 616 

Mental Health: Mental 

Retardation and Substance 

Abuse Services 629 

Insurance 

Agent Services Division 636 

NRCD 

Invironmental Management 656 

Wildlife Resources and 

Water Safety 656 

Secretary of State 

Secunties Division 656 

rV'. LIST OF RULES AFFECTED 

October 1, 1988 675 

V. CUMULATIVE INDEX 683 



NORTH CAROLINA REGISTER 

Publication Deadlines and Schedules 

{September I98S - March 1989) 



Issue 


Last Day 


Last Day 


Earliest 


* 


Date 


for 


for 


Date for 


Earliest 




Filing 


Electronic 


Public 


Effective 






Filing 


Hearing & 
Adoption by 

Agency 


Date 


+♦++++++ 


++++++++ 


++♦♦♦+♦♦ 


++++♦+♦+ 


+++++++H 


09/01; 88 


08/11 88 


08/18/88 


10/01/88 


0101/89 


09,15,88 


08/26 88 


09,02,88 


10; 15 88 


01/01/89 


10,03,88 


09/12,88 


09/19,88 


11/02,88 


02/01/89 


10/14/88 


09/26,88 


10/03/88 


11/13/88 


02 '01/89 


11/01/88 


10/11,88 


10 18/88 


12/01/88 


03/01/89 


11/15/88 


10/26/88 


11,02 88 


12/15/88 


03 01/89 


12/01/88 


1107, 88 


11/1588 


12 31,88 


04 01 89 


12/15,88 


11,23 88 


12/02/88 


01/14/89 


04,01/89 


01/02/89 


12/08 88 


12/15/88 


02/01/89 


05/01/89 


01/16/89 


12/27/88 


01/03/89 


02/15/89 


05/01/89 


02/01/89 


01/10/89 


01/17/89 


03,03,89 


0601/89 


02/15,89 


01/26 89 


02-02/89 


03,17/89 


06/01/89 


03/01/89 


02/0889 


02/15/89 


03/31/89 


07/01,89 


03/15,89 


02/21 89 


03/02/89 


04/14/89 


07/01/89 



* The "Earliest Effective Date" is computed assuming that the public hearing 
and adoption occur in the calendar month immediately following the "Issue 
Date", that the agency files the rule with The Administrative Rules Review 
Commission by the 20th of the same calendar month and that ARRC approves 
the rule at the next calendar month meeting. 



CORRECTION 



(ORRIX I ION TO NOTICE AS PI BUSHED IN THE NORTH CAROLINA REGISIER AI 
3.13 N( R 598 SHOLLD READ: 



TITLE 13 - DEPARTMENT OF LABOR 

lyoticc is hereby ^h'en in accordance with G.S. I50B-I2 that the Department of Labor intends to rea- 
dopt rule cited as h SCAC ^ .()l03ia){ 1 2) and amend rule U NCAC 7C .0103(0. 



T, 

Th 



he proposed ej'fective date of this action is February I , I9S9. 



he public hearing; will be conducted at 10:00 a.m. on November 9^ 1988 at Auditorium, Ifighway 
Bui/ding. I South Wilmington Street, Raleigh, S . C. 

C. oinment Procedures: People wanting to present oral testimony at the hearing or who want to have 
written testimony read at the hearing should provide a written .summary of the proposed testimony to the 
department by November 4. 1988. Oral presentations will be limited to 15 minutes each. Written 
statements not presented at the hearing will be accepted by the department until November 9. 1988. All 
correspondence should be directed to Bobby Bryan, N. C. Department of Labor, 4 West Edenton Street, 
Raleigh, \C 2760/. Interpreters for the hearing impaired will be made available if requested 24 hours 
in advance. 



Jyotice is hereby given in accordance with G.S. 1 5(>B- 12 that the Department of Labor intends to amend 
rulefs I cited as /J NCAC U .0401. .0402 and adopt rule £3 NCAC A5 .0503. ' 

I he proposed effective date of this action is February / , 1989. 

1 he public hearing will be conducted at 2:00 p.m. on November 14. 1 988 at Auditorium. Highway 
Building, I South Wilmington Street, Raleigh, N. C. 

C^ ommcni Procedures: People wanting to present oral testimony at the hearing or who want to have 
written testimony read at the hearing should provide a written summary of the proposed testimony to the 
department by November 4, 1988. Oral presentations will be litnited to 15 minutes each. Written 
statements not presented at the hearing will he accepted by the department until November 9. 1988. All 
correspondence should be directed to Bobby Bryan, ,M. C. Department of Labor, 4 West Edenton Street, 
Raleigh, NC 2760 L Interpreters for the hearing impaired will be made insatiable if requested 24 hours 
in advance. 



NORTH CAROLINA REGISTER 607 



VOTING RIGHTS ACT FINAL DECISION LETTER 



[G.S. I20-30.9H. effective July 16, 1986, requires that all letters and other documents issued by the 
Attorney General of the United States in which a final decision is made concerning a "change af- 
fecting voting" under Section 5 of the Voting Rights Act of J 965 be published in the North Carolina 
Register. / 



U.S. Department of Justice 
Civil Rights Division 

\VBR:LLT:rGL;ivp:dvs 

DJ 166-012-3 Voting Section 

W3810-3811 P.O. Box 66128 

W6903 Washington, D.C. 20035-6128 

September 15, 1988 

Richard J. Rose, Esq. 

Poyner & Spniill 

P. O. Box 353 

Rocky Mount, North Carolina 27802-0353 

Dear Mr. Rose: 

This refers to the two annexations [Annexation Nos. 174 and 175 (1988)] and the designation of 
the annexed areas to single-member districts for the City of Rocky Mount in Fdgecombe and Nash 
Counties, North Carolina, submitted to the Attorney (jcneral pursuant to Section 5 of the Voting 
Rights Act of 1965, as amended, 42 C.S.C. 1973c. We received your submission on July 18, 1988. 

The Attorney General does not interpose any objections to the changes in question. However, 
we feel a responsibility to point out that Section 5 of the Voting Rights Act expressly provides that the 
failure of the Attorney General to object does not bar any subsequent judicial action to enjoin the 
enforcement of such changes. See the Procedures for the Administration of Section 5 (28 C.F.R. 
51.41). 

Sincerely, 

Wm. Bradford Reynolds 
Assistant Attorney General 
Civil Rights Division 

By: 



Gerald W. Jones 
Chief, Voting Section 



60S NOR TH CAROLINA REGIS TER 



PROPOSED RULES 



1 1 n E I OFPARTMKM OF 
ADMIMSIRAIION 



No 



oticc is hereby given in accordance with G.S. 
I SOB- 1 2 that the Department of Administration 
intends to adopt rules cited as I NCAC II .2201 
- .2204: amend rules cited I NCAC II .2102 - 
.2105, .2111, .21 16 and repeal rides cited as I 
NCAC II .2119 - .2121 and .2123. 

I he proposed effective date of this action is 
February I, 1 989. 

1 he public hearing will be conducted at 10:00 
a.m. on I'uesdav. November 15. /'/VS' at Policy 
and Planning Conference Room, .Administration 
Building, 5th Floor, 116 West .lones Street, 
Raleigh. North Carolina 27603-SOOj. 

L^ omment Procedures: Any interested person 
may present his or her comments either in writing 
prior to or at the hearing or orally at the hearing. 
Anv person mav request information, permission 
to he heard or copies of proposed regulations by 
writing or calling Becky Barbee, Department of 
Administration. 1 16 West Jones Street, Raleigh, 
North Carolina 2'^M)3-8003 (919) 7,\,\72JJ. 

CHAITKK II III MAN RKLAIIONS ( X)l ACII, 
SK{ HON .2100 - FAIR IIOLSING 

.2102 DIIIMIIONS 

A^ u ;.e t.l H+ (+H^ SL ' olion: 

WHicn used m this Section, the followiniz tenns 
shall ha\e the t'ollowiiiii meanines unless the 



context elearh requires a different meaiiiniz: 

(1) "Act" means shall mean the State lair 
Housing .Act, S.tr -t-WOr e- ^■Hr North 
Carolina (jeneral Statutes 41.\. 

(2) "Complainant" mcanr i shall mean any per- 
son who flics a complamt with the council. 
council alleang injun as a l esult of an illcizal 
discrimmalon housing prat tice. 

(3) "Complaint" nuHinL . shall mean a sworn 
statement filed w^ith the council council, w- 
$4+ef on tk*» a form pro\ided for this purpose 
hy the slash council council »+ utliL ' r . ' . iL ' O 
conlaininii A<» inlbrmution required t*y R ulc ' 
.2in.i(c) A f^wi Section, which alleges that 
an unlawlul discnmmatory housing practice 
has occurred or is going to occur. 

(-+)• "Conciluilion Agreement" mean ' . » written 
agieemenl between t4*^ complainant rt«4 t+» 
re '. j'oiulent revolving t+h* dispute tnil lined m- 
t4+<* complaint tH+4 netting fo ilh r e m e dies , fof 
reliel 4«r* I+h* complainant. 



{^ "Conciliutor" mouno a member trf Ao 
council steff doLiignated hf t+K» director te- 
seek voluntarv' conciliation trf » complaint. 

f6^ (4] "Council" mean a shall mean the North 
Carolina Human Relations council. 

f^ (5) "Director" meaii j i shall mean the execu- 
tive director of the council, council or ^ in 
his or her absence or inability to serve, the 
assistant director of the council, council. 

ffvf "Invet^tigator ' muuno » member t4 Ae 
council staff designated W Ae dir e ctor te 
investigato A«» ailegationii contained m tb» 
complaint ttft4 mak e a preliminary determi 
nation oi whether there a*e reui . o liable 
grounds te believe tbirt an- unlawful 
discriminatory housing practice occuiTed. 

fO-^ (^ "Records" m e ans shall mean any writ- 
ten, pnnted, taped, photograpliic, steno- 
giaphic, microfilmed, computerized or other 
form or document used m for the storage of 
infonnation. 

f-l-(4) (Ji "Respondent" m e ans shall mean any 
person who i^ alleg e d h& hav e committed aft 
unlu' . vful discnminatory housing practic e . 
against whom a complaint has been filed 
with the council. 

Siaiutoiy Authority G.S. 41 A-l : 41.1-2. 

.210.1 (OMPLAINTS: lORM: CONTENTS: 
I IMNG 

(-cH- A«y person claiming t» be injured W aft 
unkiv i lul diiicnminator i' housing practice may file 
a ' . vnileii. s' . scim complaint with Ae council. 
Assi 'i tance m drafting aftti filing complaints shall 
(-►e available tt* complainants at- the council's e^ 
fieer 

f4H 1 'ach complaint, which shall be written, 
signed. aft4 s\' i oni before a notary public Bf other 
per - ion duly authorised by law- te administer 
oaths aft4 talre acknowledgements, shall be »» a 
fonn provid e d by tbe council e* otherwise con 
taining tbe infonnation required h* Paragraph fe* 
e+ tbt?. Mule. >.'(itarial service shall be furnished 
■■ wtho Bt charg e by tbe council. 

^ A complaint shall contain tbe following m- 

f-1-} the fiiW name, address a«4 telephone 

numb e r t4 tbe complainant; 
(-3-^ tbe name afi4 address »i tbe respondent; 
(-^ a fc Hincise statement trf the facts constitut 

iftg tbe alleged unkivsful discriminatopy 

housing practic e ; a«4 

\ • J III" uii T.\.' \ 'I uti iv ,' cTTm 1 1 1 1 11- \/i yj-\±j I.' I 1 1 i\j 

allegod uiilav i ful discriminatopy housing 
practice if known. aft4 rf the alleged «ft- 
lavWul dis . cnminaloiy housing practic e i* 
si a conlinuinj nature, tbe dates between 



NORTH CAROLINA REGISTER 



609 



PROPOSED RULES 



which \ki» continuing unlawful 

dii . criminutor r housing practiw i* allogod 

te havo ocouiTt>d, tf known. 

fd) ?4w complaint must b» 61t»4 within 4^ 

4#r* aiWf th«* allt'g^ unla' . ' i ful dif i criminatory 

hou ii ing practice occurr t> d. tf ^ allogod practic e 

i* contmuoun. the date »f tite occurrenc e ef tbe 

practic e shall ^ ajw det^ aftef the practioo com 

mencod. Hf> tev aft4 including the date e» which 

i | i . hich tl+e complaint i* file4 if tfee unlasvful prac 
t+ee continuL ' s. 

fe-^ 44»e complaint must be file4 with the 
council at it*i otVice at 4-34- W e r.t Jones Street, 
Raloigh, Noilh (\irolina 3761 1. 

fl^ 44**» complaint nmy be filed- by poroonal 
doli ' ■ OP/, by mail. »f by dolivcr/ te a mombor ef 
the council Bf the council staff. 

(a) Fach complaint must be made in writing 
and mu^t be ori a fonn pro\ided by the council. 

(b) t:ach complamt must contain the following: 

( 1 ) the name and address of the complamant; 

(2) the name and address of the respondent. 



(b) Amendments must be filed on forms 
vided by the council. 

(c) .Amendments will be considered filed with 
the council when they are received and date- 



til 



if known: 

a statement of the facts upon which the 
allegations of an unlawful discnminatorv 
housine practice is based: 



(4) the latest date on which the alleged un- 
law lul discnminator\' housing practice oc- 
curred. or a statement that the unlawful 



housing practice ijs present 1\ continuing; 
and 
(5) the notarized signature of the complainant. 

(c) I:"ach complaint must be filed with 180 davs 
after the date on which the alleged discnminatorv' 
housing practice occurred. In the case of an al- 
leged discnminator\' practice which is contin- 
uous, the complaint must be filed within 180 
davs after the last dav on which the alleged 
discriminatory practice took place. 

(d) A complaint will be considered filed with 
the council when it has been recened and date- 
stamped a[ the council's otfice at 121 West Jones 
Street, Raleigh. North Carolina 27603. 

Statutory Authority G.S. 4IA-7. 

.2104 AMKNDMF.M OF COMPLAINT 

(a) With the appro\al of the director, a com- 
plaint may be amended by the complainant to 
correct typograpliical errors and errors of fact, to 
clarify and amplify allegations contained in the 
complaint, afhi to add other allegations of un- 
lawful discriminatory housing practices related to 
or growing out of the subject matter of the ori- 
ginal complaint and Xo_ add the names of re- 
spondents disco\'ered during the course of 
processing ot the complaint. 



stamped in the council's office at 121 West Jones 
Street, Raleigh, North Carolina 27603. 

(d) Within ten davs after the filing of an 
amendment, the council shall notify all the ori- 
ginal respondents of the filing and provide each 
respondent with a copy of the amendment. liach 
respondent shall be given an appropriate amount 
of time to respond to the amendment. 

(e) If the amendment includes new respond- 
ents, witliin ten days after the amendment is filed 
each new respondent shall be notified of the filing 
of the complaint and the amendment, and shall 
be .given the same opportunity to answer the 
complaint as was provided to the original re- 
spondents after the filing of the onginal com- 
plaint. 

(f) Amendments need not contain a restate- 
ment of the entire text of the orianal complaint. 
.Vmendments may adopt the original complaint 
bv reference and include a statement of the addi- 
tions or corrections being made by the amend- 
ment. 



(g) All claims asserted in an amendment are 
deemed to have been made at the time the ori- 
ginal complaint was tiled. All new respondents 
named m an amendment are deemed to have 
been named at the time the original complaint 
was filed. 

Statutory Authority G.S. 41A-7. 



.2105 WITHDRAWAL OF COMPLAINT 

A complaint may be withdrawn upon the writ- 
ten request of the complainant. aft4 with the 
wntton consent &f the director. "] he reasons for 
the withdrawal shall be stated within the request. 
When a case is withdrawn, it shall be without 
prejudice to the riatits of the complainant. 

Statutor}^ Authority G.S. 4IA-7. 

.2111 IWESTIGATION: SUBPOENAS 

/ --I V .'\ •> ■ I f-i t .• «-ji-i.-.lT-l-.l~.l.t i t T-n j-i - ■ r\ « T-i 1 - ■ 1 ■ - 1 « f-l ■ I t i-v T- r-t-\ 'i\ I 

\TCj ' yt (-111 T I ~u^\.' 1 1 Ln 'i\, L 11 1 1 1.' , HI I 11 1 ^v; J 1 1 i,u [TTi riiuy 

request access te- premises, records, documents, 
aft4 other C i idence &f possible sources ef evi- 
d e nc e fof allegations contained in- the complaint. 
fhf A4- any reasonable time, af+d after 44> days 
notice, the investigator may depose witnesses Bf 
oth e r individuals whose testimony ki neces ' . i ary ' 
fof the furtluranc e trf the investigation. Depo 
sit ions shall be taken before a person authonj'.ed 
te administ e r oaths by the law* e4 the Stat e »4 
North Carolina, v4*e shall certify *+» the written 



610 



NORTH CAROLIN.A RlGISTER 



PROPOSED RULES 



R ' Lord t4 A# d e por . ition th^ A# dopuncnt was 
tktiv ii' . vom prior to Ae taldng trf Ae dopoiiilion. 
^Pw complainant aft4 tb« nj '. pondant m^ be 
prL". r ont with t*f >' . 'itliout an attorney ttft4 may- »*- 
amini* aH4 croci . excimino t+h* deponent at- tfet* 
te*H* e+' tiw dopO! ' ition, ef y»¥ H«y submit wfit- 
hm que^ . tions which wtH- fe><* Fea4 to Ae doponont 
a«4 which t4+e doponent i . hall an - jwc fr ?i# wfit- 
k« r e cord t4 the depoC f ition. which ' ihuU be 
traniicnbed. i. hall bt» submitted fof revi e w to tbe 
deponent, who ii hull make afty changoo aft4 shall 
M^ t4+e ' i i . ntteii record, e* upon failur e to sign, 
shall state t+te reason fof the failure. 

fef ¥ & request by the invo i. tigator fcvf access to 
premises, records. «*f docum e nts ©* other evi- 
dence i« denied, ef tf witnesses »f indi' i iduals fe- 
fe^ie to be deposed, the director may issu e a 
! . ubin'ena compelling acc e ss to premises, pfe- 
duction f+f documents, fyf- appearanc e e+" wit- 
nesses t+F oth e r indi' i iduals, aH4 Hwy issug 
interT(<galones. Interrogatories shall be delivered 
bv c e rtifi e d mail, shall be wi i '. \vered lull) afi4 ifi- 
writing, '. ha l l be signed by the parly e* 'ivitness to 
whom rt- Ht directed. c»4 shall be notan/ed. H the 
interrogatory (*f i+HV pttft- thereof i^ objected tor 
tbe reason fof the obj e ction shall be stat e d h* 
writing, signed by (be person to whom tbe 
intenogatory it. directed. tt«4 shall be notariz'.ed. 
i\n .. ' i ' » ers to interrogalones. t+f reasons (m- eb- 
jecting to tb- an .. i . i .e rs. shall be deli' - ered to the 
council office by certified mail e+ m person 
' ■ sithin +0 days iifter receipt ef tbe uitenogatorr. 

f(i+ I poll tbe filing ef a vi i ntlen application to 
the dir e ctor, a r e a '. onable numb e r t>f subpo e nas 
shall be iS '. ued »+» behalf ef- tbe respondent. 
Thoso subpoenas shall state Ae nam e aft4 ad- 
dreso ef (be r e spondent aft4 shall state (brtt they 
V i 'ere issued at- tbe re '. pondent V . requei . t. 

(a) In conducting an in\estigation. council 
cmploNccs ma\ at any reasonable time request 
access to iiidi\iduals for questioniniJ. and may 
request access to premises, records, documents, 
and other c\idence. or possible sources of c\i- 
dence. rele\ant to the complaint, for inspection 
and copying. 

(b) ]f a request pursuant to Paragraph (c) of 
this Rule is denied, the director ma\ issue a 
subpoena or subpoena duces tecum compelling 
an individual to appear before a council em- 
ployee for questioning, and the director max- is- 
sue a subpoena or subpoena dues tecum 
compelling a person or persons to pro\ ide access 
to premises or production of evidence . 



fa) I^ a* a result »i tbe infonnal conciliation 
e ndeavors, tbe conciliator i* able to achi e ve aj+Hjt- 
resolution »f tbe complaint, mi4 to obtain assur 
ances, wher e appropriate, tbat- tbe r e spondent 
wili r e m e dy satisfactorily afiy violations trf tbe 
protected rights under tbi* Aet ef tbe 
complainant aft4 vrili assure tbe elunination b( 
unlawful discriminatory housing practic e's &f tbe 
pr e vention »f their occurrence m tbe future, tb«* 
a written conciUation agreement shall be f>fe- 
pared. 

fb) Tbe conciUation agreement sbali set- forth 
ay metuures to be taken by aw party, may m- 
clud e provisions fof compliance r e ports as lie- 
scribod m Rule .21 19 &f tbts Section. aft4 shall 
be signed i:m4 notaris e d by- tbe complainant, tbe 
respondent. aft4 tbe director. 

fe+ A copy ef tbe signed a«4 notarij'ed concil 
iation agreement shaU be delivered to tbe 
complainant aft4 tbe respondent. 

(a) Am or all parties to a complaint, including 
the council, ma\ agree to resoh'e a complaint at 
any time. The council shaU consider a complaint 
resoh'ed. and shall close its processing of the 
complaint if 

( 1) the terms of the agreement are reduced to 
a written conciliation agreement; 

(2) all parties to the agreement have signed the 
written agreement ; and 

(3) the council is a party to the agreement and 
the director has signed the wntten agree- 
mcnt. 



(b) If a complainant and a respondent agree to 
resolve a complaint without including the council 
as a part\' to the agreement, the council shall 
continue to. proces> the complaint unless: 

( 1) the director detennines that the terms of 
the agreement are consistent with the 
goals and purposes of the Act; 

(2) the complainant withdraws the complaint. 

(c) in i complaint invohing multiple 
complainants or multiple respondents, any one 
or more complainants may agree to resolve the 
complaint with any one or more respondents. 
U such an agreement is reached between some, 
but not all, of the complainants and respondents, 
and if the council is a party to the agreement , the 
council shall consider the complaint resohed and 
shaU close its processing of the complaint as it 
concerns the differences and allegations between 
the parties to the agreement. The council shall 
continue to process the complaint as it concerns 
differences and allegations between parties who 
ha\e not reached an agreement. 



Siaiuian Aiulwniy (,.S. 4/A-S. 



.2116 CONCILIA I ION .AGREEMF.NTS 



Statutoij Aulhorily G.S. 4IA-7. 
.2119 (OMPLIANCK RK\ lEW (REPE.MED) 



NORTH CAROLINA REGISTER 



611 



PROPOSED RULES 



.2120 NOTICE OF COMPLIANCE REVIEW 

(KEPEAI.ED) 
.2121 !)l CI.ARATION OF NON-COMPLIANCE 

(REPEALED) 
.2123 CIVIL ACTIONS BY THE 

COUNCIL (REPEALED) 

Statutory Authority S.L. 1983, c. 522, s. I. 
SECriON .2200 - FAIR EMPLOYMENT 

.2201 DEFINITIONS 

As used in this Section, the following terms 
shall have the following meanings unless the 
context clearly requires a different meaning: 

(1) "Complainant" sh;ill mean imy person who 
files a compkunt with the council; 

(2) "Complaint" shall mean a sworn statement 
fded with the council, on a form provided 
for this purpose by the council, which al- 
leges that a discriminatory employment 
practice has occurred; 

(3) "Council" shall mean the North Carolina 
Human Relations Council; 

(4) "Director" shall mean the director of the 
council, or in his or her absence or inability 
to serve, the assistant director of the council; 

(5) "Investigator" shall mean a member of the 
council staff designated by the director to 
investigate the allegations contained in the 
complaint and to seek voluntary conciliation 
of the compkiint; 

(6) "Respondent" shall mean any person, 
group, organization, or comp;my who is al- 
leged to have committed a discriminatory 
employment practice. 

Statutory Authority G.S. 143-422.3. 

.2202 FILINf. OF COMPLAIN I 

(a) Within '^O days after the occurrence of a 
discriminatory employment practice, any person 
claiming to be injured by such practice may seek 
to fde a complaint with the council at the coun- 
cil's office, 121 West Jones Street, Raleigh, North 
Carolina 27603. A member of the council staU 
shall interview each prospective complainant and 
determine whether or not the facts stated by the 
prospective complainant alleges a discriminatory 
employment practice within the jurisdiction of 
the councd. 

(b) Complaints shall be written on a form 
provided by the council and signed by the 
complainant. A member of the council staff shall 
assist complainants in reducing complaints to 
wilting and shall assist in setting forth such in- 
formation as may be required by the council. 



Statutory Authority G.S. 143-422.3. 

.2203 NOTICE TO RESPONDENT 

After a complaint has been fded with the coun- 
cil, the director shall assign an investigator to the 
complaint. Within a reasonable time after the 
filing of a complaint, the investigator shall notify 
the respondent that a complaint has been filed 
against it by the complainant, and the investi- 
gator shall inform the respondent of the 
allegations made in the complaint. 

Statutory Authority G.S. 143-422.3. 

.2204 INVESTIGATION: OPINION: 
AND CONCILIATION 

(a) After a complaint has been fded with the 
council, the investigator assigned to the com- 
plaint shall investigate the matter to determine 
whether or not a discriminatory employment 
practice has occurred. 

(b) After completing the investigation, the in- 
vestigator shall report the findings to the director. 
Based upon the findings, the director shall issue 
an opinion as to whether or not a discriminatory 
employment practice occurred. The director 
shall inform the complainant and the respondent 
of this opinion. 

(c) If the director fmds that no discriminatory 
employment practice has occurred, he or she 
shall dismiss the complaint and inform the 
complainant and the respondent of the dismissal. 
If the directors fmds that a discriminatory em- 
ployment practice occurred, he or she may direct 
the investigator or some other member of the 
council staff to seek to resolve the dispute and 
remedy the discriminatoty employment practice 
by conference, conciliation, and persuasion. 

(d) Notwithstanding any other provisions in 
this Section, any party, including representatives 
of the council, may initiate concihation dis- 
cussions, and the complaint may be resolved, at 
any time after the complainant first informs the 
council of an allegation of a discriminatory em- 
ployment practice. If the parties resolve the 
complaint before the investigation is completed 
but before the director issues an opinion, the di- 
rector shall issue no opinion. 

Statutory Authority G.S. 143-422.3. 

TITLE 4 - DKPARTMtNT OF COMMERCE 



No 



otice is hereby given in accordance with G.S. 
I SOB- 1 2 that the Department of Commerce in- 
tends to amend nde(s) cited as 4 iWCAC IE 
.0303. 



612 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



1 he proposed effective date of this action is 
Februao' I, 1989. 

1 he public hearing will be conducted at 10:00 
a.m. on S'ovembcr 16, I9S8 at Room 6168, Dobbs 
Building. 430 N. Salisbury Street, Raleigh, NC 
27611. 

C omment Procedures: Any person interested in 
this nde may present oral comments to the action 
proposed at the public rule-making hearing or de- 
Ih-er written comments to the Commerce Finance 
Center not later than November 21 , 1988. Anyone 
planning to attend the hearing should notify Bruce 
Strickland. Jr., Commerce Finance Center, by 
November 15, 1988. 

CHAPTER I - DEPARTMENTAL Rl LES 

SLBCIIAPTER IE INOl STREVL AND 
POI LI TION t ONTROI. RE\ENLE BONDS 

SECTION .0300 - REMFW CRI LERL\ 

.0303 MANLFACTLRING WAGE TEST 

(d) WTiere the industrial project does not meet 
the requirements m (a) of this Rule, a project 
may nonetheless be approved by the secretary it: 

(1) The go\eming body of the county submits 
a resolution to the effect that the project 
be approved notwithstanding the fact that 
the operator will not pay an average 
weekly manufacturing wage which is 
above the average weekly manufacturing 
wage paid in the county; and 

(2) The Labor Resources Section of the De- 
partment of Commerce, or its successor, 
makes a finding from various labor statis- 
tics available to the department that un- 
employment in the county is especially 
severe. For the purpose of this Section, 
"especially severe unemployment" will be 
defined as: 

(A) when unemplo>ment in the county has 
averaged, for the most recent 6 month 
period for which unemployment statistics 
are available from the Employment Secu- 
rity Commission, either: 
(i) at least 10 percent, or 
(ii) at least 4-W 125 percent of the average 
unemployment rate for the State of 
North Carolina, and is at least 6 per- 
cent, and m the case of (i) and (ii) only 
where the rate of unemployment in the 
county for the last month of that 6 
month period is at least 6 5 percent; or 



Statutory- Authority G.S. I59C-7. 
****************** 

I\ otice is hereby given in accordance with G.S. 
J SOB- 12 that the North Carolina Seafood Indus- 
trial Park Authority intends to adopt rule(s) cited 
as 4 NCAC 17 .0204 and .0205. 

I he proposed effective date of this action is 
February I, 1989. 

1 he public hearing will be conducted at 7:30 
P.M. on November 14, 1988 at Administration 
Building, Wanchese Seafood Industrial Park, 
Wanchese, North Carolina. 



Co 



' omment Procedures: Interested persons may 
present statement'' orally or in writing at the 
hearing or in writi/ig prior to the hearing by mail 
addressed to: .Ms. Nina Johnson, Director, 
li'anchese Seafood Industrial Park, P. O. Box 
549, Wanchese. A. C. 27981. 

CHAPTER 17 - SEAFOOD INDLSTRL\L PARK 
ALTHORITY 

SECTION .0200 - REGULATION OF DOCKAGE 

.0204 DEFINHIONS 

Dockage is the charge assessed against a vessel 
or other water craft for berthing or making fast 
to any wharf, mooring device or other facility of 
the Authority or for mooring to a vessel so 
berthed. 

Statutory Authority G.S. 113-315.29(10). 

.0205 RATF:S: FEES AND PENALTIES 

(a) Dockage will be computed on the basis of 
overall length of vessel. 

(b) /Vn annual fee of two dollars and fifty cents 
($2.50) per lineal foot or fractional p;u1 thereof 
shall be charged all commercial fishing vessels 
using the Wanchese Seafood Industrial Park 
docks, tie-up space alongside the concrete dock 
and for second or third boat abreast mooring. 

(c) A annual fee of five dollars and fifty cents 
($5.50) per lineal foot or fractional part thereof 
shall be charged all vessels or other water craft 
other than commercial fishing vessels using the 
Wanchese Seafood Industrial Park docks, tie-up 
space alongside the concrete dock and for second 
or third boat abreast mooring. 

(d) The fee sh;ill be paid, in advance, on an 
annual or semiannual basis for docking privi- 
leges. 



NORTH CAROLINA REGISTER 



613 



PROPOSED RULES 



(c) Checks should be made payable to the NC 
Seafood Industrial Park Authority and mailed to: 
Administrator, Wanchese Seafood Industrial 
Park, P. O. Box 549, Wanchese, N. C. 27981, or 
payment may be delivered to the Office of Ad- 
ministration, Wanchese Seafood Industrial Park, 
Harbor Road, Wanchese, N. C. 

(f) A permit will be issued upon payment of 
annual or semiannual dockage fees, and a decal 
will be provided which must be displayed on the 
vessel so as to be seen from the dock. 

(g) Payment of annual or semiannual fees shall 
entitle a vessel to docking privileges for normal 
turnaround time between trips, using any avail- 
able dock space under the jurisdiction of the park 
authority on a first come, first served basis. 
Normal turnaround time shall mean not more 
than 14 days between trips. 

(h) Any extra time beyond 14 days must be 
specifically authorized by Dock Security or the 
park administrator and will be assessed at a per 
diem rate of twenty-fne cents ($0.25) per Linear 
foot for commercial fishing vessels and fifty cents 
($0.50) per linear foot for recreational vessels and 
all other water craft. 

(i) A commercial fishing vessel without an an- 
nual or semiannual permit desiring to dock for 
any portion of a 24-hour penod, or on a daily 
basis, will be assessed at a daily rate of twenty- 
five cents ($0.25) per foot (LOA). The daily rate 
for all other \cssels meeting authorization criteria 
for dockage will be fifty cents ($0.50) per foot 
(LOA). Daily fees must be paid in advance upon 
tieing up or at the earliest time that park staff is 
on hand to collect paym^ent. 

(j) During penods of storm in the area or off- 
shore, the docks may be used as a harbor of ref- 
uge. In tlus e\cnt, all vessels requiring refuge 
from the elements may dock at the facility on a 
first come, first served basis and no fee will be 
charged any vessel during such period. When the 
necessity for the use of the facihties as a harbor 
of refuge no longer exists, vessels must leave the 
premises within 24 hours or be subject to the 
normal fee provisions contained in this Section 
m Rule .0202. 

(k) A fee in the amount of twenty-five dollars 
($25.00) will be assessed against any vessel lea\- 
ing refuse on the dock. In addition, a fine of up 
to fifty dollars ($50.00) may be assessed against 
any vessel departing the premises and lea\ing 
behind trash, debris, equipment, or other mate- 
rial requiring cleanup by the park administrator. 

(1) A service fee of twenty-five dollars ($25.00) 
will be charged any vessel taking on water by 
means of a metered fire hydrant along with 
charges for actual water usage according to the 



water rate schedule established by the authority 
for all users withm the Seafood Park. 

(m) A fme of up to fifty dollars ($50.00) shall 
be assessed against any vessel whose crew is 
found to have thrown trash, debris, or fish into 
the harbor while berthed at the authority dock. 

(n) Dockage fees shall not include payment for 
water, electricity or other ancillary ser\ices. 

Statuion' Authority G. S. 113-315.29(8), (9), 
(10): //3-3J5.34. 

TITLE 10 - DEPART.MENT OF HUMAN 
RESOURCES 

lyotice is hereby given in accordance with G.S. 
I SOB- 1 2 that the Department of Human Re- 
sources intends to adopt, amend rule(s) cited as 
JO NCAC 3M .0101, .0104. .0/07, .0203 -.0205, 
.0207. and .0501. 

I he proposed effective date of this action is 
March J. 1989. 

1 he public hearing will be conducted at 9:30 
a.m. on December 9, 1988 at Hearing Room. 
Council Building. 70/ Barbour Drive. Raleigh. SC 
27603. 



c 



omrnent Procedures: .iddress Comments To: 

Lynda McDaniel 
Division of Facility Services 
70/ Barbour Drive 
Raleigh. NC 27603 



Comments will also be received orally at the 
hearing. 

CHAPTER 3 - F.\CILITY SERMCES 

SLBCH.VPIER 3M - MINIMUM STANDARDS 
FOR MOBILE INTENSIVE CARE UNITS 

SECTION .0100 - DEFINITIONS 

.0101 AMBULANCE 

".Vmbuiance" means any privately or publicly 
owned motor vehicle, aircraft, or \essel that is 
especially designed, constructed, or modified and 
equipped and is intended to be used for and is 
maintained or operated for the transportation on 
the streets or highways, waterways, or airways of 
this state of persons who are sick, injured, 
woundL^d, con\'alescent, or otherwise incapaci- 
tated or helpless. 



614 



NORTH CAROLIlWA REGISTER 



PROPOSED RULES 



Statutory Authority G.S. I3IE-I57(a). 

.0104 ADVANCED LIFE SUPPORT 
NON TRANSPORTING LNIT 

" ALS Ad\anccd I ife Support nontransporting 
unit" means a \ehicle used to transport advanced 
life support equipment and personnel to the 
scene of a medical or traumatic emergency. It is 
not to be used for the transport of sick, ill, or 
injured patients. The vehicle must be staffed at 
a minimum by one person certified at a level 
equal to or greater than the level of service the 
vehicle is permitted to operate. 

Statutory Authority G.S. J3 IE- J 57(a). 

.0107 MOBILE INTENSIVE CARE LNIT IV 

"Mobile Intensive Care Unit IV" means a Cat- 
egor>- I Ambulance staffed at a minimum by at 
least one emergency medical technician - 
defibnllation as defined in 21 NCAC 321 1 .0102 
(p) and one certified ambulance attendant and 
equipped in accordance with the standards es- 
tablished by the Medical Care Commission for 
pro\iding remote intensi\e care or cardiac care to 
sick and injured persons at the scene of a medical 
emergency and during transport to a health care 
facility. 

Statutory Authority G.S. 131 E-156. 

SECTION .0200 - EQUIPMENT 

.0202 MOBILE INTENSINE CARE LNIT I 

In addition to equipment required in .0201 of 
this Section, ambuluncL" . an ambulance pormittod 
identified as a mobile intensive care unit I shall 
carry the following equipment and medical sup- 
plies in amounts concurrent with the medical 
protocols in effect for the A-t-S .Advanced I ife 
Support program which the ambulance provider 
is affiliated: 

(1) two-way radio capable of continuous voice 
communications with the sponsor »f Fe- 
sourc e hospital; 

(2) dextrose 5 percent in water (D5W); 

(3) normal saline solution; 

(4) lactated ringer's solution; 
fl>) buttorfiy noodlcr i ; 

{^ (21 angiocath needles; 

f^ (6) vacutainers; 

(^ (22 l.V. administration sets appropriate to 

solution containers and needles; 
(^ (8) esophageal obturator ainvay or 

esophageal gastric tube airway; 
(-W| (9) antishock trousers; 
f-l-H (10) prL'm e Q '. ur e d aft4 propackagod admin 

ii i trution k+t ei 1:1000 epinephrine 1:100 to 

treat systemic allergic reactions. 



Statutory Authority G.S. I31E-I57(a). 

.0203 MOBILE INTENSIVE CARE UNIT III 

An ambulance ambulanc e s p e rmitted identified 
as a mobile intensive care unit III shall carry the 
equipment and supphes required in .0201 7 .0202, 
aH4 .030 ' 1 of this Section and the following 
equipment list and medical supplies, as well as 
drugs contained on the FMT-paramcdic .Mini- 
mum Drug List approved by the N.C. North 
Carolina Board of Medical Examiners for use by 
EMT-paramedics in amounts/concentrations 
concurrent with the medical protocols in effect 
for the ALS Ad\-anced Life Support program 
with which the ambulance pro\ider is affiliated: 

( 1) two-way radio capable of continuous voice 
communications with the sponsor hospital; 

(2) angiocath needles; 

(3) vacutainers; 

(4) l.V. administration sets appropriate to 
solution containers and needles; 

(5) esophageal obturator ains'ay or esphageal 
gastric tube airway; 

(6) antishock trousers; 

(7) sterile svnnges; 

(8) endotracheal tube; 

(9) larvnffliscope (handle and blade); 

( 10) cardiac monitor and accessories; and 

(11) defibrillator. 

A vehicle Vohiolea permitted identified as a 
mobile intensive care unit III may also as an op- 
tion of the program medical director carry addi- 
tional drugs contained on the E.M T-paramedic 
Drug Formulary' approved by the N.C. North 
(Carolina Board of .Medical Examiners as ad- 
dressed in the medical protocols in effect for the 
ALS program which the ambulance provider is 
affiliated. 

Copies of the EMT-paramedic Minimum Drug 
List and the EMT-paramedic Drug Formulary 
may be obtained from the Office of Emergency 
Medical Ser\ices, 701 Barbour Drive, Raleigh, 
North Carolina 27603. 

Statutory Authority G.S. I3IE-I57(a). 

.0204 ADVANCED LIFE SUPPORT 
NON I RANSPORTING UNIT 

A \'ehicle Vehicles ponnitt e d identified as ALS 
an Ad\'anced Life Support nontransporting units 
shall carry equipment and supplies in accordance 
with the level of A4-^ Ad\anced 1 ife Support 
care offered by the provider with which the ve- 
hicle is alTiliated. These requirements are defmed 
in Rules .0202, .0203, .0205, and .0207 of this 
Subchapter. These vehicles shall also comply 
with requirements and criteria set forth in North 



NORTH CAROLINA REGISTER 



615 



PROPOSED RULES 



Carolina General Statutes 20-125, dealing with 
horns and audible warning devices; 20-130.1, 
dealing with the use of red lights and other visual 
warning devices; and 20-183.2, dealing with ve- 
hicle equipment safety inspections. 

Slalutory Authority G.S. I3IE-I57(a). 

.0205 MOBILE INTENSIN F. CARE IMT II 

An ambulance Ambuluncos pomiittcd identified 
as a mobile intensive care unit II shall carry the 
equipment and supplies required in .0201 aH4 
.0303 of this Section and the following equip- 
ment list, as well as the following drugs contained 
on the I'MT-advanced intermediate .Minimum 
Daiij 1 1st appro\cd bv the North Carolina Board 
of Medical I'xaminers for use bv I .M I'-advanced 
intermediates in amounts/concentrations concur- 
rent with the medical protocols in effect for the 
A IS Ad\anccd 1 ifc Support program which the 
ambulance pro\ider is atTdiated: 

( 1) two-way radio capable of continuous voice 
communications with the sponsor hospital; 

(2) anaocath needles; 

(3) \acutainers; 

(4) \y . administration sets appropriate to sol- 
ution containers and needles; 

(5) esophageal obturator airway or esophageal 
gastnc tube airway; 

(6) antishock tn^users; 

(7) stenle svnnges: 

f:H [8] endotracheal tube; 

H4 t^ lar,ngoscope (handle-blade); 

(-H ( 10) cardiac monitor and accessories; 

f6^ nji defibnilator. 

A \ehicle identified as a .Mobile Intensive Care 
Unit n may also as an option of the program 
medical director carry additional drugs contained 
on the I'M r-ad\anced intermediate Drug 
1 onnularv approved by the North Carolina 
Board of Medical I'xaminers as addressed in the 
medical protocols in e fleet for the Al S program 
with which the ambulance provider is alTiliated. 

Copies of the 1- .M l-advanced intermediate 
Minimum Drug I ist and the I'M r-ad\'anced 
intennediate Dmg lormular\ may be obtained 
from the OtTice of b'mergency Medical Services, 
701 Barbour Drive, R^ 
27603. 



^h. North Carolina 



f-H ■' Vringoo (bac i io - pr e packaged); 
(-^ drug ' j: 

fi*i ^t^%- dextroi i o; 

(4*1 naloxcmij; 

fe4 lidocaino; 

(4^ Dodium bicarbonato; 

fe^ atropine; 

(f^ e pinephnntj (1:1000): 

(§} L'puu'phnno ( 1:10.000); 



(b) Qublingual nitroglycerin. 
Statutory Authority G.S. I3IE-I57(a). 

.0207 MOBILE INTENSIVE CARE UNIT IV 

An ambulance identified as a Mobile Intensive 
Care Unit- IV shall carry, in addition to the 
equipment referenced in Rule .0201 of this Sec- 
tion, an automatic or semi-automatic defibrilator. 

Statutory Authority G.S. I3IE-I57(a}. 

SECTION .0500 - CO.MMLNICATION 

.0501 TWO-WAV RADIO 

A mobile intensive care vehicle must contain a 
two-way radio capable of establishing effective 
voice communication between the mobile inten- 
sive care personnel and the sponsor /rooouroo 
hospital personnel from any geographical point 
within the service area of the program. 

Statutory Authority G.S. I3IE-I57(a). 



lyotice is hereby given in accordance with G.S. 
I SOB- 1 2 that the Division of Health Services in- 
tends to adopt, amend, repeal rule(s ) cited as 10 
NCAC 4C .0203, .0303, .0306, .0406; 7B .0335, 
.0344, .0345. .0350 - .0353; 7C .060/ - .0603; 8A 
.0901 - .0907; SB .0901 - .0906; 9D .0303, .0309. 
.0327 - .0330; lOA .0487; lOD .0702. .0901, 
.1622. .1625, .1627; JOG .0/03, .0508, .0509 and 
.090/ - .09/4. 

1 he proposed effective date of this action is 
March /, /989. 

I he public hearing will be conducted at / :30 
p.m. on November /6, /9SS at Archdale Building, 
/fearing Room (Ground Floor), 5/2 North 
Salisbury Street, Raleigh, North Carolina. 



Co 



'Omment Procedures; Any person may request 
information or copies of the proposed ndes by 
writing or calling John P. Barkley, Agency Legal 
Specialist, Division of /health Setyices, P.O. Box 
209/. Raleigh. North Carolina 27602-209/, (9/9) 
733-3/34. Written comments on these rule 
changes may be sent to Mr. Barkley at the above 
address. Written and oral comments (no more 
than ten minutes for oral comments) on these nde 
changes may ^e presented at the public hearing. 
Notice should be given to Mr. Barkley at least 
three days prior to the public hearing if you desire 
to speak. 



616 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



CHAPTER 4 - HEALTH SERVICES: OFFICE OF 
THE DIRECTOR 

SLBCHAPTER 4C - PAYMENT PROGRAMS 

SECTION .0200 - ELIGIBILITY 
DETERMINATIONS 

.0203 ANNLAL NET FAMILY INCOME 

(b) The time period to be used as the basis for 
computing annual net family income is the 12 
month period immediately preceding the date a 
patient or his representative makes application 
for eligibility to a particular payment program. 
However, if any of the family's wage earners were 
unemployed at any time during this 12 month 
period, that wage earner's portion of the annual 
net family income shall be computed on the basis 
of income and deduction for the six month pe- 
riod immediately preceding the date of applica- 
tion plus a projection of income and deductions 
(excluding medical expenses) for the six month 
penod immcdiatcK succeeding the date of appli- 
cation based upon the current employment or 
benefit situation. Medical expenses from the 
12-month period unmediately preceding the date 
of application may be deducted from mcome. 

(d) An\' of the followmg expenses which are 
paid or incurred by a member of the patient's 
family shall be allowed as deductions in deter- 
mining annual net family income: 

(1) state, federal, and social security taxes and 
any deductions from pay required as a 
condition of employment such as manda- 
tor>' retirement contributions; 

(2) work related expenses incurred by the in- 
dividual which arc required as a condition 
of cmplo\ment such as uniforms, tools, 
and professional liability insurance, but 
excluding items such as transportation to 
and Irom work, personal clothing and 
cleaning costs, and food expenses; 

(-3^ (3| medical and dental expenses not cov- 
ered by a third party payor, including the 
reasonable costs of transportation re- 
quired to obtain the medical and dental 
services; 

(4j (42 health insurance premiums; 

f4^ (52 child care expenses for any child 14 
years of age and under and any hand- 
icapped child 1 5 years of age and over if 
both parents of a two parent family or a 
single parent work or are disabled; 

{4i (62 expenses for the care of a spouse who 
IS physically or mentally unable to take 
care of himself or herself while the other 
spouse is at work; 



(4) (22 child support and alimony payments 
paid to support someone outside of the 
family household; and 

^ (82 educational expenses incurred for the 
purpose of managing the disability of any 
member of the patient's family. 

Statulorv Authority G.S. /30A-5{3); I30A-I24; 
I30A-I27: I30A-I29; I30A-I77; I30A-205. 

SECTION .0300 - ELIGIBILITY PROCEDLRES 

.0303 PAYMENT LIMITATIONS 

(e) If the division requests a refund of a pay- 
ment made to a provider, the refund must be 
made to the division within 45 days after the date 
of the refund request. 

Statutory Authoritv G.S. I30A-5(3); I30A-I24; 
I30A-I27; J30A-I29; I30A-/77; /30A-205. 

.0.^06 DISQUALIFICATION 

A provider shall be disqualified from all division 
payment programs upon disqualification from 
Medicaid, Medicare, or the Title V program for 
a period not to exceed that of the disqualification 
from the other program. 

Statutory Authority G.S. l30A-5(3); I30A-I24; 
130.4-127; 130.4-129; 130A-I77; I30A-205. 

SECTION .0400 - REIMBURSEMENT 

.0406 REIMBURSEMENT RATES FOR JOBS 
BILL HEALTH PROJECT (REPEALED) 

Statutory Authority G.S. /30A-5(3); I30A-I24; 
BOA- 1 27; I30A-I29; 130 A- 177; I30A-205. 

CHAPTER 7 - HEALTH: EPIDEMIOLOGY 

SUBCHAPTER 7B - HIGHWAY SAFETY 

SECTION .0300 - BLOOD ALCOHOL TEST 
REGULATIONS 

.0335 BRE.Vni-TESTING INSTRUMENTS: 

REPORTING OF SEQUENTIAL TESTS 

(a) The standards for the approval of breath- 
testing instruments are as follows: 

(1) The commission approves the method of 
performing chemical analyses through the 
use of breath-testing instruments of a de- 
sign and of a model specifically approved 
by the commission as meeting, to its sat- 
isfaction, nationally accepted high stand- 
ards of accuracy, reliability, convenience 
and efficiency of operation. 

(2) The succeeding rules of this Section es- 
tablish operational and preventive main- 



NORTH CAROLIN.A REGISTER 



617 



PROPOSED RULES 



tcnancc procedures for breath-testing 
instruments appro\ed by the commission, 
f^ Ponding rear . i^ ' .i ' jmont ef Ae critoria fef 
approval si broath toiiting nu . trumento 
t4ti*4- ulili/ e mfrarod technology, thoni » a 
nuiratonum *+«• Vht» placing »f ftew inntru 
niL ' nto utilizing tt+a* technology m^ sef- 
vtee &» »f after JanuaP i' -H 1986. 
Individual infrared inr i trumentc . placed 
H+te- '. LT i ice before January -It 1986, may 
continue k* b<* ui . ed m accordanc e with 
t4*t» L . uccoeding ruleo e4" fht* Section appli 
cable to them. I nler . o A+^ Paragraph i* 
e arlier amended e* repealed, the moralo 
rium la ;' t ; i until Januarf' 4-r 19 , f , Q. ¥be 
model '. t4 inr . trument ' j ' jubject to the 
morLitonum awr 

fA^ IntoxilvL . er, Model 101 1A5. Modified 
(Rule - : . 4^^ttw4 Oj . lS). 

fB-^ Breathalv^er. Model JWa ( Rules rU^>Mt, 
m^ O.ilJ). 

f4;^ Into.Mineter, Model a^OO (Ruleo rO^-t^ 
aH4 .OJIO). 

^ lnto\ilvf , er. Model ^400 (Rules t^^»0 
aR4 .035 11. 

f4^ &A4: \'enfi e r (Rules rOJ^^ aft4 .0353). 



Siatutorv Aiithorhy G.S. 20-/39./ (b). 

.0344 I^^O\ll.^/ER: MODEL 40I1AS 

MODll IKD (KFI'KAI FD) 
.0345 PRK\EMI\K MAIMEN.\NCE: 

IMOXII NZFR: MODEL 401 IAS 

MODIFIED (REPEALED) 

Staluloiy Authority G.S. 20-/39./ fb). 

.0350 INTOXIL\ ZER: MODEL 5000 
The operational procedures to be followed in 
using the Into>dlyzer, Model 5000 (approved fof 
H-^e only ' i sith t+h» Toxite '. t alcoholic breath sim 
ulator) arc: 

(1) hisure obsen,'ation period requirements 
have been met; 

(2) Insure alcohohc breath simulator 
thermometer shows proper operating tem- 
perature and insure simulator is properly 
connected to instrument: 

(3) Press -START TEST": 

(4) When -INSERT CARD' appears, insert 
test record: 

(5) Insure instrument displays proper time and 
date; 

(6) Insure instrument displays expected results 
from the alcohohc breath simulator; 

(7) When -PI EASE BLOW" appears, collect 
breath sample: 

(S) When PI EASE BLOW" appe^irs, collect 
breath sample; 



(9) WTien test record ejects, remove and record 
times and results. 

If the alcohol concentrations differ by more 
than 0.02, a third or subsequent test shall be ad- 
ministered as soon as feasible by repeatmg steps 
(1) through (9). 

Statutory Authority G.S. 20-/39./ (b). 

.0351 PREVENTIVE MAINTEN.VNCE: 
INTOXIL\ ZER: MODEL 5000 

The preventive maintenance procedures for the 
Intoxilyzer Model 5000 (approved fef use efii¥ 
wrtit th# Toxitoot alcoholic breath simulator) to 
be followed at least once during e\'ery 30 days 
arc: 

(1) Verify alcoholic breath simulator 
thermometer shows proper operating tem- 
perature and insure simulator is properly 
connected to instrument; 

(2) Press "START TEST"; 

(3) When "INSERT CARD" appears, insert 
test record: 

(4) Verify instniment displays proper time and 
date: 

(5) Verify instrument displays expected results 
from the alcohohc breath simulator; 

(6) \\Tien "PLEASE BLOW" appears, collect 
breath sample; 

(7) When "PLEASE BLOW" appears, coUect 
breath sample: 

(8) WTien test record ejects, remove and record 
simulator results; 

(9) Repeat steps (1) through (8); 

(10) Verify alcohol alcohohc breath simulator 
solution is being changed every 14 days or 
alter 25 tests, whichever occurs first. 

A signed copy of the pre\'enti\'e maintenance 
checklist shall be kept on fde for at least three 
years. 

Statutory Authority G.S. 20-/39./ fb). 

.0352 BAC VERIFIER (REPEALED) 
.0.353 PREVENTIN E MAINTENANCE: 
BAC \ ERIFIER (REPEALED) 

Statutory Authority G.S. 20-139. /(b). 

SL BCHAPTER 7C - OCCIPATIONAL HEALTH 
BRANCH 

SECTION .0600 - ASBESTOS IN BLILDINGS 
PROGR.VM 

.0601 GENERAL 

The Asbestos in Buildings Program (.\IBP), 
Di\ision of Health Ser\ices, has been designated 
by the Governor to implement the Asbestos 



61 S 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



Hazard Emergency Response Act (A HERA) 
P.L. 99-519 and the Environmental Protection 
Agency (EPA) rules 40 CER Part 763 and ac- 
company in appendices, which have been 
adopted by reference in accordance with G.S. 
1 SOB- 14(c). 

Statutory Authority G.S. i30A-5(3); P.L. 99-5/9. 

.0602 ACCRKDITATION 

(a) No person shall commence or continue to 
engage in the business of performing inspections, 
writing management plans, designing abatement 
actions, performing abatement work or supervis- 
ing abatement work related to abestos in schools 
until they have accredited by the program in the 
specific discipline for the activity being per- 
formed. 

(b) An applicant for accreditation shall meet 
the provisions of the "EPA Model Contractor 
Accreditation F'lan" contained in 40 CER 763 
(Subpart E, appendix C). 

(c) In addition to the requirements in (b), an 
apphcant shall meet the following: 

(1) an apphcant shall have successfully com- 
pleted an approved initial training course 
v\ithin twelve months immediately pre- 
ceding application; 

(2) an mspector shall have a bachelor's degree 
and at least three months experience or 
an associate degree or two-year college 
degree and at least six months experience 
or a high school degree or equivalent and 
at least twelve months experience; for 
purposes of this Subparagraph, experience 
shall mean work as or under direct super- 
vision of an accredited inspector or em- 
ployment as a supervisor or worker; 

(3) A management planner shall ha\e a 
bachelor's degree and at least six months 
experience, or an associate degree or two- 
year college degree and at least 12 months 
experience or a high school degree or 
equi\alcnt and at least 24 months experi- 
ence; for purposes of this Subparagraph, 
experience shall mean asbestos related 
work as of under direct supervision of a 
management planner, an accredited in- 
spector or employment as a supervisor, 
except that at least three months of the 
work must have been as or under the di- 
rect supervision of a management planner; 

(4) An abatement designer shall be an archi- 
tect, engineer, or certified industrial 
hygienist (CIH); an abatement designer 
shall complete the Environmental Pro- 
tection Agency course developed specif- 
ically for abatement designers; and 



(5) A contractor or supervisor shaU have a 
high school degree or equivalent and at 
least three months experience as or under 
the direct supervision of an accredited 
supervisor or employment as an asbestos 
worker. 

(d) To obtain accreditation, the apphcant shall 
submit or cause to be submitted the foUowing 
information to the Asbestos in Buildings Pro- 
gram: 

(1) full name of apphcant; 

(2) name, address and telephone number of 
employer; 

(3) discipline(s) applied for; 

(4) date(s) of training course(s) for each dis- 
cipline; 

(5) name and location (city and site) of course 
attended; 

(6) training agency name and address; 

(7) confirmation of completion of an ap- 
proved initial or refresher training course 
from the training agency, sent directly to 
the program; the confirmation shall be in 
the form of a certified copy of the certif- 
icate of completion of the approved 
training course, or a letter confirming 
completion of the course on training 
agency letterhead, or a hst of names of 
persons who have successfully completed 
the training course, with the apphcant's 
name included, on the training agency 
letterhead; 

(8) a copy of the diploma or other written 
documentation from the educational in- 
stitution; and 

(9) work histor> documenting asbestos related 
experience, includmg employer name, ad- 
dress, and phone number; positions held; 
and when positions were held. 

(e) AH accreditations, including accreditations 
issued prior to October 10, 1988, shall expire at 
the end of the 12th month following completion 
of required initial or refresher training. To be 
reaccredited, an apphcant shaU annually com- 
plete the required refresher training course. The 
refresher training course must be completed be- 
fore accreditation expires. An apphcant for re- 
accreditation shall also submit information 
specified in (d)( l)-(d)(7). If a person fails to ob- 
tain reaccreditation prior to expiration of accred- 
itation, that person may be accredited only by 
meeting the requirements of Paragraphs (b), (c), 
and (d). 

(f) Pursuant to the requirements for refresher 
training courses in 40 CER 763, Subpart E, Ap- 
pendix C, the state has determined that refresher 
training course shall include a review of the fol- 
lowing key aspects of the initial training course: 



NORTH CAROLINA REGISTER 



619 



PROPOSED RULES 



(1) the refresher training course for all disci- 
plines shall include a review of health ^- 
fccts of asbestos, respiratory protection, 
and personal protective equipment; 

(2) the refresher training course for inspector 
shall include a review of record keeping, 
writing the inspection report, inspecting 
for friable and non-friable asbestos- 
containing material, and assessing the 
condition of asbestos-containing material 
building materials; 

(3) the refresher training course for manage- 
ment planner shall include a review of re- 
cord keeping, management plan content, 
hazard assessment, determining an oper- 
ations and maintenance plan, and se- 
lection of control options; 

(4) the refresher training course for abatement 
project designer shall include a review of 
designing abatement solutions, 
budgeting cost estimation, considerations 
for work in occupied buildings and writing 
abatement specifications; 

(5) the refresher training course for 
contractor supervisor shaO include a re- 
\iew of state of the art work practices, air 
monitoring and supervisory techniques; 
and 

(6) the refresher training course for abatement 
workers shall include a review of state of 
the art work practices, personal hygiene, 
and additional safety hazards. 

(g) .AH accredited persons shall be assigned an 
accreditation number by the program. 

(h) A list of approved training courses may be 
obtained from the program. 

(i) Upon request, a person accredited by an- 
other state shall be automatically accredited by 
the program if that state's accreditation program 
is at least as stringent and as comprehensive as 
the accreditation program established by these 
rules. 

(j) Ihe program may revoke accreditation 
upon a fmding that its issuance was based upon 
incorrect or inadequate information that mate- 
rially affected the decision to issue accreditation. 
The program may also revoke accreditation upon 
a finding that the accredited person has \'iolated 
a generally accepted industry^vide standard or 
practice, and the violation creates a significant 
public heahh hazard. A person whose accredi- 
tation is re\oked because of fraudulent misrepre- 
sentations or because of violations that create a 
sigrdficant public heahh hazard shall not be au- 
thorized to reapply for accreditation before three 
months after the revocation. 

Staiuton Authority G.S. l30A-5(3j; P.L. 99-519. 



.0603 ASBESTOS MANAGEMENT PLANS 

(a) All Local Education Agencies shall submit 
Asbestos Management Plans for school buildings 
to the program on forms provided by the pro- 
gram. Asbestos Management Plans shall meet 
the requirements contained in 40 CFR 763. 

(b) In addition to the requirements in Para- 
graph (a), the management plan shall comply 
with the foUowing: 

(1) All asbestos containing building materials 
shall be identified, located, classified and 
assessed; 

(2) The local education agency shall notify the 
program of asbestos removal projects 10 
working days before removal is to begin 
and within 10 working days after the re- 
moval area has been cleared for occu- 
pancy; 

(3) For asbestos removal projects, an accred- 
ited abatement designer, a certified indus- 
trial hygienist. or a person classified as an 
industrial hygienist in training (by the 
American Board of Industrial Hygiene) 
with at least three months asbestos expe- 
rience and working under the direct 
supervision of a certified industrial 
hygienist, shall perform the initial in- 
spection prior to beginning removal; 

(4) For asbestos removal projects, a certified 
industrial hygienist in training (by the 
American Board of Industrial Hygiene) 
with at least three months asbestos expe- 
rience and working under the direct 
supervision of a Certified Industrial 
Hygienist, shall perform final visual in- 
spection and fmal air sampling for clear- 
ance and occupancy; 

(5) Industnal hygienists and laboratories per- 
forming anal>lical services shall be em- 
ployed by or under contract with the local 
education agency and shall not be super- 
vised by the contractors who are furnish- 
ing asbestos services; and 

(6) Contractors, including inspectors, man- 
agement plarmers, abatement designers, 
contractors or supervisors and workers, 
who perform Asbestos Hazard Emergency 
Response Act activities shall be accredited 
in North Carolina by the program prior 
to pertbrming such activities. 

Statutoty Authority G.S. /30A-5(3l; P.L. 99-5/9. 

CHAPTER 8 - HEALTH: PERSONAL HEALTLI 

SI BCH.VPTER 8A - CHRONIC DISE.\SE 



620 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



SECTION .0900 - JOBS BILL HEALTH 
PROJECTS 



.0901 
.0902 
.0903 

.0904 
.0905 

.0906 



.0907 



GENERAL (REPEALED) 
DEFINITIONS (REPEALED) 
JOBS BILL PROJECT LIAISONS 
(REPEALED) 

ELIGIBILITY (REPEALED) 
JOBS BILL HEALTH SERVICES 
PROJECT FLNDS (REPEALED) 
JOBS BILL FEE-FOR-SERMCE 
HOME HEALTH AIDE SERVICES 
(REPEALED) 

JOBS BILL HEALTH PROJECT 
HOME HEALTH AIDE SERVICES 
(REPEALED) 



Statutory Authority G.S. I30A-223. 

SECTION .0900 - RURAL OBSTETRICAL CARE 
INCENTIVE FUNDS 

.0901 GENERAL 

Rural Obstetrical Care Incentive Funds are ad- 
ministered by the Maternal and Child Health 
Branch. The funds are used to reimburse physi- 
cians for a portion of malpractice insurance pre- 
miums as an incentive to physicians to practice 
obstetrics in underserved counties. 

Statutory Authority S. L. I9S7. c. 1100, s. 39.3. 

.0902 APPI IC VriON FOR FUNDS 

(a) Local health departments in counties that 
are underserved with respect to obstetrical care 
may apply to the .Maternal and Child Health 
Branch for rural obstetrical care incentive funds. 
A physician may request a local health depart- 
ment to apply for the funds. 

(b) A county is considered underser\'ed with 
respect to obstetrical care if the county meets one 
or more of the following criteria, listed in order 
of priority. 

(1) there are no public or private prenatal 
scr\ices available within the county; 

(2) there is no public prenatal clinic available 
within a health department, hospital or 
primary care center that serves low in- 
come pregnant women within the county; 

(3) there is a public prenatal clinic, but no 
physician to staff the clinic or to provide 
physician back-up for physician extenders; 

(4) the county has inadequate obstetrical 
co\erage, demonstrated by such factors as 
a waiting list of 28 calendar days or more 
for an appointment at the public prenatal 
clinic or 50 percent or more of resident 
live-births occurring outside of the 
county; 



(5) implementation of these rules would pre- 
serve county obstetrical services threat- 
ened with discontinuation. 

(c) The Maternal and Child Health Branch 
shall send a request for applications to local 
health departments that includes a deadline for 
receipt of applications. 

(d) Local health departments that apply for 
rural obstetrical care incentive funds shall include 
in the application: 

(1) a coverage plan, developed in cooperation 
with eligible physicians, that addresses 
prenatal and delivery care for low income 
women in the county, and quality of care; 

(2) contracts with eligible physicians who 
agree to participate in the local health de- 
partment's coverage plan and provide the 
services required by Rule .0906; the con- 
tracts may be contingent upon the avail- 
ability of rural obstetrical care incentive 
funds; and 

(3) evidence that receipt of these funds will 
improve or rectil'y the problems with 
obstetrical coverage in the county. 

Statutory Authority S. L. I9S7, c. 1100, s. 39.3. 

.0903 PHYSICIANS ELIGIBLE TO 
PARIICIPATE 

(a) A physician is ehgible to receive rur-al 
obstetrical care incentive funds if the physician: 

(1) is licensed to practice medicine in North 
Carolina; and 

(2) carries malpractice liability insurance that 
is not being totaUy or partially paid for the 
physician as an employee of the federal 
go\'emment or by an institution of higher 
learning or an afTiUate of the institution. 

(b) A physician does not have to reside in the 
underserved county to be ehgible to participate. 

Statutoiy Authority S. L. 1987, c. 1100, s. 39.3. 

.0904 DISBURSEMENT OF FUNDS 

(a) Subject to the availability of funds, the 
Maternal and Child Health Branch shall disburse 
rural obstetrical care incentive funds to local 
health departments that have submitted an ap- 
proved application as follows: 

(1) first priority shall be given to those coun- 
ties that meet the criteria in Rule 
.0902(b)(1), second priority shall be gi\'en 
to those counties that meet the criteria in 
Rule .0902(b)(2), third pnonty shaU be 
given to those counties that meet the cri- 
teria in Rule .0902(b)(3), fourth priority 
shall be given to those counties that meet 
the criteria in Rule .0902(b)(4), and fifth 



NORTH CAROLINA REGISTER 



621 



PROPOSED RULES 



pnonty shall be given to those counties 
that meet the criteria in Rule .0902(b)(5); 

(2) the Maternal and Child Heahh Branch 
shall rank and disburse funds to under- 
ser\'ed counties within each priority group 
according to the anticipated improvement 
in obstetrical coverage that will result 
from funding: and 

(3) Counties funded during FY 1988-89 shall 
receive ongoing funding based upon a re- 
newal application which continues to 
meet the requirements of Rule .0902. 

(b) I- or each eligible physician with whom the 
local health department contracts, the depart- 
ment will be paid either the difference between 
the physician's premiums with obstetrical care 
co\'eragc and without obstetrical care coverage, 
or six thousand five hundred dollars ($6,500), 
whichever is less. Payment shall be based upon 
a maximum of one million one million dollars 
($1,000,000 $1,000,000) coverage. The local 
health department will then pay this amount to 
the physician to cover a portion of the physi- 
cian's annual malpractice insurance premiums. 
The total pa\ ments to one physician cannot ex- 
ceed the abo\e amount. 

(cl No more than nineteen thousand fi\'e hun- 
dred dollars ($19.500j may be disbursed to any 
underservcd county. 

(d) No funds may be disbursed to a health de- 
partment in the absence of a contract with an el- 
igible physician. 

Staiuion Auihority S. L. /987, c. 1100, s. 39.3. 

.0905 I'AKIK IPATION RF.Ql IRKMK.M S FOR 
LO( Al HE.Al.TH UKI'ARTMKNTS 

A local health department that receives rural 
obstetrical care incentive funds shall: 

(1) maintain statistical and fiscal information 
required by the Maternal and Child Health 
Branch to document participation by eligible 
physicians under the contract; and 

(2) assure that physicians participate in the 
coNcrage plan for the duration of the con- 
tract period. 

Slalulon Authority S. L. 19S^ , c. J/00, s. 39.3. 

.0906 PAR IK IPATION REQLIRKMEN TS 
FOR P1I\SICIANS 

(a) A participating physician shall: 
( 1 ) pro\ide prenatal care to low-income 
women by: 
(A) staffmg a public prenatal clinic or pro- 
viding medical back-up for and super- 
vision of physician extenders pro\iding 
services in a public prenatal clinic; or 



(B) providing prenatal care in the physi- 
cian's office. 

(2) take part in an on-call arrangement for 
coverage of obstetrical care, including de- 
liveries, for low income women who arc 
residents of the underserved county; 

(3) not refuse to provide prenatal or delivery 
care for any patient based on economic 
status or ability to pay; and 

(4) participate in data collection efforts re- 
quired by the Maternal and Child Health 
Branch. 

(b) No participating physician shall be required 
to assume management of the care of any 
obstetrical patient if the level of care required for 
that patient is beyond the professional compe- 
tence of that physician. 

(c) No participating physician shall be required 
to provide dcli%'ery services if the underserved 
county does not have a facility for obstetrical 
delivery. 

Statutory Authority S. L. 1987, c. 1100, s. 39.3. 

CHAPTER 9 - MEALTH: LABORATORY 

SUBCHAPTER 9D - CERTIFICATION AND 
IMPROVEMENT 

SECTION .0300 - LABOR.\TORY 
CERTIFICATION 

.0.^03 CERTIFICAFION: CERTIFICATION 
RENEWAL: AND FEES 

(b) A laboratory L . hall mav renew its certif- 
ication every year by payment of the certification 
fee by December 1 of the preceding year. If the 
fee has not been paid by December 31 of each 
year, the laboraton,''s certification mH shall not 
be renewed for the next vear, and the laboratory 
must shall apply for recertification pursuant to 
Rule .0328 of this Section. Notwithstanding the 
abo\e, the first certification renewal fee after the 
effective date of these rules shall be due on Feb- 
ruary 1, 1988 and must be paid on or before 
March 1. 1988 or the laboratory's certification 
vrtii shaU not be renewed. Fvory ' Hve yoars, Ae 
laboratory ohaU ronev i - ite ci,'rtification bar .e d 
upon In addition to pavment of the certification 
fee, an on-site e\"aluation by a laboratory certif- 
ication evaluator and compliance with the mini- 
mum requirements of this Section are required 
for renewal . 

(d) The certification fee shall be twenty dollars 
($20.00) per anaKle. 'I'he minimum and maxi- 
mum fee per iinal}1e group shall be as set out in 
G.S. 130A-326(7). The anal\le groups are as 
follows: 

( 1) Inorganic Chomistry inorganic chemistn.'; 



622 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



(2) Organic Choini ' jtry t (Syiitht ' t i u Organic 

Clu ' inical ' .i) omanic chemistry 1 (synthetic 

orfianic chemicals); 
fr^ Organic C"ht'mi !i try H- (Volatil e Orgonio 

("hL'mical ' j) organic chcmislPy II (volatile 

organic chemicals); 

(4) Total Coliforms (total cohfomis); and 

(5) Radio Chomif i tP i ' radio chemistry. 

The certification fee shall not be prorated nor 
refunded. 

Slatutory Authority G.S. J30A-3/5; I30A-326. 

.n.W9 ( IIKMISTRV Ql ALITY COM ROl. 

RL'quiiL'inL ' nti . fof quality control 4*4** »f cht ' m 
t«4 aiuily .e-. aw as followu: 

(-H [ai All quality control data shall be available 
for inspection. 

(-2| (b) t\ laboratory shall analy/e i*» unlaiown 
pcrlbrmance samples nampli ; f when available } 
once f>t»F v-eaf fo+ paramotL'rL i incar . urL ' d. Rooull ii 
mu ' Jt bt» V i ithin \^ control lijnit ' . . LM i labli '. liL'd by 
C Pi\ f»f L>ach analy;ii ' j fo* which At* laboratory 
is »f ' . ' ■ ii i liL ' ! ! to- be ceitilicd. M r e-. ultH we Htft- 
within Ae control limit -i . a Rillow up porfonn 
anc e i i amplL ' f i hall be m\h\\ /od t*fHi roiiults mu ' ; . t 
be ' I ' . ilhin control limit;i et . tablif . h e d by 1: PA . as 
follows: 

( 1 ) at least one United State rn\ironmental 
Protection Agency (I l',\) perionnance 
e\alualion sample pair per year for pa- 
rameters measured, results shall be within 
control limits established bv liPA lor each 
aiiahsis for which the laboratory^ is or 
wishes to be certified, if results are not 
within control limits, a follow-up liPA 
perfonnance evaluation sample shall be 
analv/ed and results shall be with control 



limits established bv I- PA; 



Q 



double-blind samples shall be analyzed 
when submitted to a certified laboratory 
and results shall be within established 
control limits, these data shall be of equal 
importance to the I" PA peri'ormance 
exaluation sample data m determining the 
laboratory's certification status; 
(3) on-site quality control samples shall be 
anal\/ed w hen presented to t]ic laborator\' 
during the on-site visit of the laboratory 
certification evaluator and results shall be 
within established control limits, these 
data shall be of equal importance to the 
r I'.\ performance evaluation sample data 
and the double-blind sample data in de^ 
temiininu the laborator\'s certification 



status; 



tii 



an acceptable peri'ormance level of 75 
percent shall be maintained for each 



analylc for which a laboratory is or wishes 
to be certified, this 75 percent a\'eragc 
shall be calculated from the If) most re- 
cent performance sample data points from 
the V. PA water study, double-blind, blind, 
and on-site samples. 

(e) In addition, analysis for regulated volatile 
organic chemical under H) NCAC lOD .1624(e) 
shall only be conducted bv laboratories that have 
received conditional approval by F,{^A or the de- 
partment according to 40 C F.R. 141.24(G)(10) 
and (11) which is hereby adopted by reference 
pursuant to G.S. 150B- 14(c). 

(f) Analysis for unregulated volatile organic 
chemicals under 10 NCAC lOD 1638 shall only 
be conducted by laboratories approved under 
Paragraph (d) of this Rule. In addition to the 
requirements of (d), each laboratory analyzing for 
IJDB and DBCP shall achieve a method de- 
tection limit for FDB and DBCP of 0.00002 
mg, 1 , according to the procedures in Appendix 
B of 40 C.r.R. Part 136 which is hereby adopted 
by reference pursuant to G.S. 150B- 14(c). 

Statutory Authority G.S. I30A-3I5. 

.0327 RKVOC.\ HON: DOU'NGRADINC OR 
DF.MAL 

(a) The Department of Human Resources or 
its delegate may revoke or deny laboratory cer- 
tification when there is substantial evidence that 
a laboratory' or its cmploj'ees have done any of 
the following: 

(5) Failed to correctly analyze performance 
exaluation samples, including L'nited 
Slates F'nvironmental Protection Agency 
water study, dcnihle-blind, blind, and on- 
site samples, or faded to report the results 
w ithin 4# the specified time; 

Statutory Authority G.S. I30A-3I5. 

.0328 RKfKRTIFl CATION 

(a) A laboratory is eligible for recertification six 
months after revocation or nonrenewal of its 
certificate, except in the following instances: 

(2) A laboratory which lost certification for 
failure to correctly analyze performance 
evaluation samples is eligible for recertif- 
ication after correctly analyzing a two 
make-up performance evaluation oampl e ; 
samples; 

(3) A laboratory for which certification was 
not renewed for failure to pay the certif- 
ication fee by the date required in Rule 
.0303 of this Section is eligible for recer- 
tification 60 days after paying the overdue 
certification fee; a laboratory applying for 



NORTH C.AROLIN.A REGISTER 



62.^ 



PROPOSED RULES 



rcccrtification on this basis shall not be 
required to pa\- an additional ccrtitication 
fee with the application. 

Siaiutor}- Auihoriiy G.S. J30A-3/5: I30A-326. 

.0329 CONTRACT LABORATORIES 

(a) A laboratoPt' may sub-contract anal\lical 
work to another laboratory' if the sub-contractmg 
laborator.' has been certified by the Department 
of Human Resources r ^ anothor i . tato'o curt if 
ication program »f h^ t4*« HPA fof tfee appro 
pniitL ' puxuniL'tt'r i i. as required m Rule .0330 of 
this Section. 

(b) Laborutor . roporto mu ' jt indicato tfee labo 
rutory ' ■ vhich porfomi j i t4te analyoio, mcluding ih» 
nam e fvf t+h* ' jub contracting laborutorr. .\nv 
data Licncratcd throudi a sub-contract shall be 
reported on the report form of the laborator\" 
which performed the sub-contracted anahses and 
shall be siLoicd bv the responsible person . 

Siaiuton- Auihoriiy G.S. 130.4-3 15. 

.0330 CKRTIHCATION OF Ol T-OF-STAIE 
LABOR. MORIES 

I aborutone ' " ' v i hich have been certifii- ' d under 
equi' i ak ' nt proLiramc i m other i . tatoo ef fe>¥ tfee 
I PA a*e jliLLible fof rociprocul certitication ift 
North Carolina. rV notarized copy t4 tfee cert if 
icale i*H4 r* copy b4 4+e proLiram. tf roquoi ' tod. 
mu ' jt ^ recei' i ed by A<* Departm e nt ef Human 
Rei . ourcef ' v . i;h tfee application fo* certification- 
fa) An out-of-state laborator\ shall meet all the 
following-: conditions to obtain North Carolina 
certitication Xo_ pertorm anaKses for compliance 
with 10 NC-\C lOD .1600: 

(1) The laboratory" shall be certified under a 
similar program administered bv the state 
in which the facility i_s located or must be 
certified b\' the United States b'nviron- 



its certification status pursuant to the 
actions of another aeencv. 



mental Protection Aiiencv (1 [\\i 



(2) 



"1 lie laborator>" shall pro\'ide this otTice 
with its b P.\ performance e\aluation data 
withm 311 da\s of the receipt of those data; 

(3) An mitial on-site inspection will be con- 
ducted bv one or more laborator,' certif- 
ication evaluators aX the requesting 
laboraton's expense. follow-up in- 
spections will be conducted as frequently 
as once per year at the requestmg labora- 
tory' s expense: 

(4) I'he laboratory' shall pa\' certitication fees 
as prescnbed in Rule .0326 of this Section; 
and 

(5) The laboratory shall notif\ the North 
Carolina Department of Human Re- 
sources within 30 davs of any changes in 



(b) The laboratory's failure to comply with any 
or all of the conditions in fa| of this Rule will 
prevent the laborator,' from obtaining certif- 
ication in North Carolina or result in downgrad- 
ing or revocation of its certification in North 
Carolma. 



Slalutory Authority G.S. J30A-3/5. 

CHAPTER 10 - HEALTH SER\ ICES: 
ENVIRONMENTAL HEALTH 

SLBCH.^PTER lOA - SANITATION 

SECTION .0400 -SANITATION OF 

RESTAURANTS .\ND OTHER 

FOODHANDLING ESTABLISHMENTS 

.0487 REQUIREMENTS FOR CATERED 
ELDERLY NUTRITION SITES 

Catered Elderly Nutrition Sites where food is 
served, but not prepared, operated under the 
guidelines of the North Carolina Department of 
Human Resources, Division of Aging, shall 
comply with all the requirements provided in 
Rules .0444 to .0475 of this Section with the fol- 
lowing exceptions: 



( 1 ) sites responsible 
sanitizing of coffee 
pitchers and related 



for the washing and 
and tea preparation 
utensils shall have at 
least a two -compartment domestic sink for 
these purposes that shall not he required to 
meet the standards in Rules .0459(d) and 
.0460(i): the sink shall be constructed of 
non-to.\ic, corrosion-resistant materials 
which are smooth and durable under condi- 
tions of actual use; and under this provision, 
aU other ser\'ice utensils shall be returned to 
the caterer for washing and sanitizing; 

if refrigerated storage is limited to foods that 
do not require cooling or reheating, long- 
term refrigeration equipment shall not be 
required to meet the standards on Rule 
.0459(d); 

the following shall apply in place of the re- 
quirements in Rule .046S(b), (cj, (dj and (e): 

(a) garbage receptacles shall be kept clean and 
in good repair, with tight-fitting lids; 

(b) can liners shall be required for all garbage 
receptacles unless the site has approved 
can-wash facilities; 

(c) mop or can-cleaning water shall not be 
disposed of in the utensil sink, and all 
was*e water from mopping and can- 
cleaning operations shall be disposed of in 
an approved manner in accordance with 
Rule .0468(a) of this Section: and 



(2) 



(3 



624 



NORTH CAROLL\A REGISTER 



PROPOSED RULES 



(d) dumpster lids shall be kept closed. 

Statutory Authority G.S. I30A-248. 

SLBCIIAITKK lOD - WATER SUPPLIES 

SECTION .0700 - PROTECTION OF PUBLIC 
WATER SUPPLIES 

.0702 DEIINITIONS 

(2) "Adjacent Water System" means two or 
more water systems that are adjacent and are 
owned or operated by the same supplier of 
water and that together ser\'e 15 or more 
service connections or 25 or more persons 
daily at least 60 days out of the year. 
(5^ (31) "PubUc water system" 
(a) "Public Water System" means a system, 
including an adjacent water system, for 
the provision to the public of piped water 
for human consumption if ouch the sys- 
tem ha* at- loaot serves 1 5 or more service 
connections or regularly serves an average 
of at- lea^ 25 individualo or more persons 
daily at least 60 days out of the year. 
Such The term includes: 
(i) any collection, treatment, storage, and 
distribution facility under control of the 
operator of such system and used prima- 
rily in connection with such system; and 
(ii) any collection or pre-treatment storage 
facility not under such control which is 
used primarily in connection with such 
system. 

Authority G.S. I30A-3I5: P.L. 93-523; 40 C.F.R. 
141. 

SECTION .0900 - SUBMISSION OF PLANS: 
SPECIFICATIONS: AND REPORTS 

.0901 APPLICABILITY: PRIOR NOTICE 

(a) All persons, including units of local gov- 
ernment, intending to construct, alter, or exp.md 
a community water system, including an adjacent 
water system constructed, altered or expanded 
after March \^ IQK*^), shall give wntten notice 
thereof, including submission of applicable plans, 
specifications and engineering reports, to the en- 
vironmental health section, division of health 
services, as required by the rules of this section. 



Statutory Authority 
P. L. 93-523. 



G.S. I30A-3I5; I30A-3I7; 



SECTION .1600 - WATER QL AI.ITY 
STANDARDS 



.1622 MICROBIOLOGICAL CONTAMINANT 
SAMPLING AND ANALYSIS 

(j) An adjacent water system shall conform to 
the following sampling schedule rather than the 
schedule set forth in Paragraphs (b), (c), and (e) 
of this Rule. A water supplier shall submit 
samples monthly from each section of the water 
system supplied from a separate source. 

Authority G.S. 130.4-315; P.L. 93-523; 40 C.F.R. 
141. 

.1625 INORGANIC CHEMICAL SAMPLING 
AND ANALYSIS 

(g) An adjacent water system shall conform to 
the following sampling schedule rather than the 
schedule set forth in Paragraph (a) of this Rule. 
A water suppUcr shall submit samples every three 
years from each section of the watersystem sup- 
phed from a separate source. 

Authority G.S. J30A-3/5; P.L. 93-523; 40 C.F.R. 
14/. 

.1627 MONITORING FREQUENCY FOR 
RADIOACIIMTY 

(c) An adjacent water system shall conform to 
the following sampling schedule rather than the 
schedule set forth in Paragraphs (a) and (b) of 
this Rule. A water supplier shall take samples 
for gross alpha particle activity, radium-226 and 
radium-228, and for man-made radioactivity 
from the water system when the secretary deter- 
mines that the system is in an area subject to 
radiological contamination. When the sampling 
is required, a water supplier shall submit samples 
every four years from each section of the water 
system supplied from a separate source. 

Authority G.S. I30A-3I5; P.L. 93-523; 40 C.F.R. 
141. 



SUBCHAPTER lOG - SOLID WASTE 
MANAGEMENT 

SECTION .0100 - GENERAL PROVISIONS 

.0103 GENERAL CONDITIONS 

(f) No person shall dispose or cause the dis- 
posal of solid waste in or on waters in a manner 
that results in solid waste entering waters or being 
deposited upon lands of the state. 

Statutoty Authority G.S. 130A-294. 

SECTION .0500 - DISPOSAL SITES 

.0508 APPLICATION REQUIREMENTS FOR 
INCINERATORS 



NORTH CAROLINA REGISTER 



625 



PROPOSED RULES 



(a) Two pennits are required for each 

incinerator; a pennit to construct an incinerator 
and a permit to operate an incinerator. 

(h) I his Rul e Section contains the information 
required for a permit application fof to construct 
each incinerator. Where applicable, compliance 
with the North Carolina Environmental Policy 
Act (Sll'A), NC.(}.S 11 3A and the rules 
ad(^ptcd thereunder in K) N("A(' 25, is a prereq- 
uisite to the issuance of a construction permit. 
A minimum of two- four sets of plans will be re- 
quired for each application. 

Site and operation plans of the proposed 

incinerator; 
operational performance specifications, 

includintj all air emissions, for the pro 



(1) 



posed tacilitv, and a predictive model of 
air emissions approved by the Division; 

(4} [32 A copy of the air quahty permit appU- 
cation to the division of environmental 
management, Department of Natural Re- 
sources and Community Development; 

(4) (4} An approval letter from the umt of local 
government having zoning authority over 
the area where the facility is to be located; 

f4^ (_52 1 he type, quantity and source of waste 

for disposal ; and 
(6) any other infonnation pertinent to the 
proposed conslructi(m plan. 
(c) 1 his Subsection contains the infonnation 
required for a pennit application to operate an 
incinerator: 

( 1) a showing that the facility has been con- 
structed in accordance with plans and 
specifications, and other conditions of the 
construction permit; 

(2) a showing that the facility can be operated 
to meet pertbrmance specifications; 

(3) a showing of compliance with the opera- 
tional requirements in Rule .11509; 

(4) an air quality permit issued bv the Divi- 
sion of Fnvironmental Management, De- 
partment of Natural Resources and 
Community Development, shall be ob- 
tained pnor to operation; and 

(5) any other information pertinent to the 
proposed operation plan. 

Statutoiy Authonty G.S. I30A-294. 

.0509 OPKKM lOWL KK.Ql IREMEMS 
FOK INCINEKAIORS 

Any person who maintains or operates an 
incinerator shall maintain and operate the site in 
contormance with the following practices, unless 
otherwise specified in the permit: 



(7) Aft aif quality pormit issued fe>y the division 
&f environmontal inanagomont. Department 
ef Natural Resourc e s a«4 Community De- 
velopmont shall be obtained prior te opera 
lion; the operator shall perform stack tests 
as required by the division for evaluation of 
incinerator peribrmance; 

Statutory Authority G.S. / 30 A- 294. 

SECTION .0900 - SEPTAGE MANAGEMENT 

.0901 PREAMBLE 

Whereas the North Carolina General Assembly 
has enacted G.S. 130A-291.1 which requires the 
Commission for Health Services to establish ca- 
tena for septage management in North Carolina; 
and whereas Senate Bill 701 requires the Com- 
mission for Health Services to estabUsh such cri- 
teria by January 1, 1989; and whereas the 
commission fmds that additional time is needed 
to develop comprehensive mles in the area of 
septage management, now, therefore, be it re- 
solved that the Commission for Health Services 
adopts the rules of this Section as an interim 
measure to assure implementation of a septage 
management program on Januar> 1, 1989. 

Statutory Authority G.S. I30A-29I.1. 

.0902 DEFIMTIONS 

The following defmitions shall apply through- 
out this Section: 

(1) Department means the Department of Hu- 
man Resources; 

(2) Septage means scptaee as defmed in G.S. 
130A-290(16a); 

(3) Septage management firm means septage 
management firm as defmed in G.S. 
130A-290(16b). 

Statutory Authority G.S. I30A-29I.I 

.0903 SEPTAGE MANAGEMENT FIRM 
PERMrrS 

(a) No septage management fum shall com- 
mence or continue operation or or after July 1, 
1989 unless the firm has a permit issued by the 
department. 

(b) If a county in which a septage management 
firm operates has adopted an ordinance that es- 
tabhshes standards for septage management, the 
septage management firm must meet those 
standards until July 1, 1989. 

(c) To apply for a permit, a septage manage- 
ment linn shall submit the following information 
to the department: 

(1) the owner's name, address and phone 
number; 



626 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



(2) the business name, address and phone 
number; 

(3) the number and capacity of pumper 
trucks; 

(4) the type of pumping equipment used; 

(5) vehicle license and serial numbers; 

(6) the hazardous waste hauler number; 

(7) the counties in which the firm operates; 

(8) the disposal method for septage; 

(9) the location of all septage disposal sites; 

(10) the disposal method for washings from the 
interior of septage hauling containers; and 

(11) the location of the disposal site for 
washings from the interior of septage 
hauling containers. 

Statutory Authority G.S. I30A-29I.3 

.0904 FEES 

Every septage management firms shall pay an 
annual fee by January 1 of each year in accord- 
ance with G.S. 130A-291.1(e). Fees shall be paid 
to the Septage Management Program, Solid 
Waste Branch, P.O. Box 2091, Raleigh, N.C. 
27602. 

Statutoty Authority G.S. 130-291. 1 

.0905 SITE PERMITS 

(a) No septage disposal site shall be used for 
the disposal of septage unless the site is permitted 
by the department. 

(b) All septage disposal sites in operation on 
January 1, 1989 are deemed permitted until Jan- 
uary 1, 1991, under the following conditions; 

(1) if a country has an ordinance that estab- 
lished standards for septage disposal sites, 
a site must meet those standards; and 

(2) this site is operated in such a manner that 
a public health hazard is not created. 

(3) To continue disposal of septage on site on 
or after January 1, 1991, the owner or the 
person in control of the site must have 
applied for and received a permit from the 
department. 

(c) To commence disposals of septage on a site 
not in operation on January 1, 1989, the owner 
or the person in control of the site must have 
applied for and received a permit from the de- 
partment. 

(d) To apply for a permit for a septage in dis- 
posal site , the owner or the person in control of 
the site shall submit the following information to 
the department; 

(1) the location of the site; 

(2) the name, address, and phone number of 

the owner or person in control of the site; 

(3) the size of the site; 



(4) the estimated annual application of 
septage in gallons; 

( 5) the uses of the site for other than septage 
disposal; 

(6) the substances other than septage previ- 
ously disposed of at this location, and the 
amounts of other substances; 

(7) the method of storage or disposal of 
septage during adverse weather condi- 
tions; 

(8) the method of incorporation, and any 
pretreatment methods, used for septage 
disposal; and 

(9) the equipment used at the site. 

Statutory Authority G.S. I30A-291.I. 

.0906 STANDARDS 

The standards m Rules .0907 - .0911 shall be 
met at all septage disposal sites on and after Jan- 
uary 1, 1991. 

Statutory Authority G.S. 130A-29I.I. 

.0907 LOCATION OF LAND APPLICATION 
SITES FOR THE DISPOSAL OF 
SEPTAGE 

(a) Sandy soils overlying an unconfmed aquifer 
shall not be used for the disposal of septage if the 
aquifer is a principal source of potable water un- 
less a minimum of three feet of separation exists 
between the point of septage application and the 
naturally occurring seasonally high water table. 

(b) Septage land apphcation sites shall be pro- 
hibited from location in the watershed of a Class 
1 or Class II reser\'oir or in the watershed of the 
portion of a Class II stream extending from a 
Class I reservoir to a downstream intake at a 
water purification plant. This requirement be- 
comes effective whenever funds have been ap- 
propriated either for purchase of land or 
construction of a Class I or Class II reservoir. 
This prohibition does not apply to those portions 
of a water supply reservoir watershed which are 
drained by Class C streams. 

(c) All septage disposal sites shall be located at 
least the minimum distance specified for the fol- 
lowing; 

(1) individual potable water supply well, 100 
feet; 

(2) community supply well, 250 feet; 

(3) waters classified All, AIIB, or SA, 500 
feet; and 

(4) any other stream, canal, marsh, coastal 
water, lake or impoundment, 100 feet. 

(d) No septage disposal site shall be located 
upslope of a potable water supply spring. 



NORTH CAROLINA REGISTER 



627 



PROPOSED RULES 



Staiutoty Aiuhority G.S. I30A-29I.I. 

.0908 M WAGEMENT OF SEPTACE LAND 
DISPOSAL SITES 

I'ntreatcd scptage shall be added to a 
wastewater treatment plan, disked, plowed or 
otherwise incorporated in the soil, or treated by 
a means to reduce pathogens or further reduce 
pathogens within 24 hours of removal from a 
ground absorption sewage disposal s\stem unless 
placed in a tcmporan,- detention system which is 
part of a registered disposal site or method: 

(1) Each septage disposal site shall be posted 
with "NO TRESPASSING" signs. Access 
roads or paths crossing or leading to the 
disposal area shall be posted "NO TRES- 
PASSING" and a legible sign of at least two 
feet by two feet statmg "SEPTAGE DIS- 
POSAL AREA" shall be maintained at each 
entrance to the disposal area; 

(2) Septage shall be applied in such a manner 
as to ha\'e no standing surface collection of 
liquid or solid wastes shall be deposited on 
the site without prior appro\al of the ap- 
propriate permitting agency; 

(3) No hazardous wastes shall be permitted on 
the site; 

(4) No industrial or solid wastes shall be de- 
posited on the site without prior approval 
of the appropriate permitting agency; 

(5) The pH of the soil-septage mixture shall 
be maintained at 6.5 or greater at all tunes. 

Statuton Authority G.S. 130A-29I .1 . 

.0909 SF.PTAGF DETENTION SYSTEMS 

All land appHcation systems for septage disposal 
shall have an alternate plan for detention or dis- 
posal of septage during periods of adverse 
weather conditions: 

(1) The use of septage detention systems shall 
be acceptable only as a temporar>' method 
during pcnods of adverse weather condi- 
tions; 

(2) Each septage detention system shall prc\ent 
the flow of scptage out of the system and 
into the seasonally high water table, onto 
the ground surface or into any of the surface 
waters of the state; 

(3j Septage management firms utilizing de- 
tention systems shall control odors from 
such systems; and 

(4) Septage shall be removed from the de- 
tentions system at the earliest favorable 
weather. 



.0910 SOIL TESTING 

(a) The soil in the disposal area shall be tested 
annually during the operation of the site and the 
results submitted to the local health department 
and to the department. The sample for testing 
shall be taken in the presence of an authorized 
representative of the department. 

(b) Only results from certified wastewater test- 
ing laboratories will be accepted. 

(c) The annual application of cadmium shall 
not exceed 0.5 kg, hectare/ yr. as measured from 
the soil test. 

(d) The pH of the soU in the disposal area shall 
not fall below 6.5 as measured in the soil test. 

Statutory Authority G.s. I30A-29I.I. 

.091 1 LAND USE AFTER SEPTAGE 
DISPOSAL 

.After septage has been applied to a site, the fol- 
lowing restrictions shall apply: 

(1) The pH of the septage-soil mi.xture shall 
be maintained at 6.5 or greater during ap- 
plication and immediately following closure; 

(2) food crops for human consumption or 
silage crops for dairv' animals shall not be 
grown until 18 months after the last appli- 
cation of septage; 

(3) The grazing of animals grown for meat shall 
be prohibited for 60 days after the last ap- 
plication of septage; 

(4) Public access is to be controDed until 18 
months after the last application of septage; 

(5) The grazing of dair>' animals shall be pro- 
hibited for three years following the last ap- 
plication of septage; 

(6) Prior to fmal closure of septage disposal 
site, the owner or operator of the site shall 
notify the department in order that a site 
inspection may be made to determine com- 
pliance with the Section; 

(7) The lifetime addition of cadmium to a soil 
shall not exceed the following: 

Soil Cation Exchange Capacity 

< 5 (sands) 5-15 (loans) > 15 (clays) 
(Cd content 
lbs acre 5 9 18 

Statutory' Authority G.S. 130A-29I.I. 

.0912 TRANSPORT.\TION 

/Ml septage shall be transported in a safe, sani- 
tar>' manner that prevents leaks or spills of 
septage. 



Statutory Authority G.S. J30A-29J./ 



Statutory Authority G.S. I30A-291.1. 



628 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



.0913 RKVOCATION OF PERMITS 

The department may suspend or revoke permits, 
including those under Rule .0905(b), in accord- 
ance with G.S. 130A-23. 

Slatiitoty Authority G.S. 1 30-29 1. 1. 

.0914 APPEALS 

Appeals shall be made in accordance with G.S. 

150B. 

Statutory Authority G.S. I30A-29I.I. 

****************** 



SECTION .0300 - FACILITY AND PROGRAM 
MANAGEMENT 

.0365 DWI SUBSTANCE ABUSE 
ASSESSMENTS 

Any facility licensed as an alcoholism and sub- 
stance abuse treatment facility in accordance with 
the provisions of 10 NCAC 14N .0100 through 
.0500 and 10 NCAC 14N .0700 may provide 
DWI assessments. If the facility wishes to pro- 
vide DWI assessments, the assessments shall be 
carried out in accordance with the provisions of 
10 NCAC 18F .0312 through .0320. 



Statutory Authority G.S. 
1 43 B- 1 47. 



20-l79(m): I22C-26; 



lyotice is hereby gi\'en in accordance with G.S. 
I SOB- 1 2 that the Cominis.sionj Director for the 
Division of Mental Health. Mental Retardation 
and Substance Abuse Services intends to adopt 
rule(s) cited as 10 NCAC I4K .0365; ISA .0114 

- .0129; ISF .0312 - .0320; ISM .1203 - .J 204; 
and repeal mle(s) cited as 10 NCAC ISA .0104 

- .01/3. 

I he proposed effective dale of this action is 
February I. I9S9. 

1 he public hearing will be conducted at 1 :00 
p.m. on Nove/nber 16, I9SS at Days Inn - 
Woodlawn, 122 W. Woodlawn Road. Charlotte, 
N.C. 28210. 



Co 



omment Procedures: Any interested person 
may present his! her comments by oral presentation 
or by submitting a written statement. Persons 
wishing to make oral presentations should contact 
Jan Warren, Division of Mental Health, Mental 
Retardation and Substance Abuse Sen' ices, 32S 
N. Salisbury St., Raleigh, N.C. 27611, (919) 
733-7971 by November 16, 1988. The hearing 
record will remain open for written comments 
from October 14, 1988 through November 16, 
1988. Written comments must be sent to the 
above address and must state the rule/rules to 
which the comments are addressed. Fiscal infor- 
mation on these ndes is also available from the 
same address. 

CIIAPTI R 14 - MENTAL HEALTH: GENERAL 

SUBCHAPTER 14K - CORE LICENSURE RULES 

FOR MENTAL HEALTH: MENTAL 

RETARDATION AND OTHER 

DEVELOPMENTAL DISABILITIES: AND 

SUBSTANCE ABUSE FACILITIES 



CHAPTER 15 - MENTAL HEALTH HOSPITALS 

SUBCHAPTER ISA - GENERAL RULES FOR 
HOSPITALS 

SECTION .0100 - VOLUNTARY ADMISSIONS: 

INVOLUNTARY COMMITMENTS AND 

DISCHARGES OF ADULTS FROM REGIONAL 

PSYCHIATRIC HOSPITALS 

.0104 PURPOSE (REPEALED) 

.0105 SCOPE (REPEALED) 

.0106 EXPLANATION OF TERMS (REPEALED) 

.0107 EVALUATION FOR VOLUNTARY 

ADMISSION (REPEALED) 
.0108 GENERAL CRITERIA FOR VOLUNTARY 

ADMISSION TO HOSPITALS 

(REPEALED) 
.0109 CRITERIA FOR VOLUNTARY ADMISSION 

OF ADULTS (REPEALED) 
Olio ADMISSION CRITERIA FOR MINORS OR 

PERSONS NON COMPOS MENTIS 

(REPEALED) 
.01 1 1 AREA/REGIONAL/HOSPITAL PLANNING 

FOR CHILDREN AND YOU III 

(REPEALED) 
.01 12 CRITERIA FOR ADMISSIONS OF 

GERIATRIC CLIENTS (REPEALED) 
.01 13 CONTINUITY OF CLIENT CARE 

(REPEALED) 

Statutory Authority G.S. 122C-3; I22C-20I; 

122C-2II; I22C-212; I22C-22I; 122C-222; 

I22C-223; I22C-224; I22C-23I; I22C-232; 
122C-233; I43B-I47. 

0114 PURPOSE 

The rules in this Section estabhsh standard 
procedures and uniform criteria for voluntary 
admissions, involuntary commitments and dis- 
charges of adults from the regional psychiatric 
hospitals within the provisions of Article 5 of 
Chapter 122C of the General Statutes. The 
purpose of the criteria is to promote coordination 
of cHent care by providing a clear uniform basis 



NORTH CAROLINA REGISTER 



629 



PROPOSED RULES 



for clinical determination of appropriate hospital 
admissions, treatment and discharges by hospital 
and area program staff. 



Statutory Authority G.S. 
I43B-I47. 



122C-2II; I22C-2I2; 



.0115 SCOPE 

The niles in this Section apply to admissions, 
commitments and discharges of all adult clients 
to the regional psychiatric hospitals of the divi- 
sion. The critena and procedures shall be fol- 
lowed by staff of the hospitals and by area 
program staff making relerrals to the hospitals. 

Statutory Authority G.S. 122C-21I: I22C-2I2: 
1 43 B- 1 47. 

.0116 EXPLANATION OF TF.RMS 

For the purposes of the rules in tlus Section the 
following terms shall have the meanings indi- 
cated: 

(1) "Area program staff means a mental health 
professional who is an employee of the area 
authority or who contracts with the area 
authority or is employed by an agency which 
contracts with the area authority and is 
clinically privileged by the area authonty. 

(2) "Chronic, fixed organic conditions'' means 
changes in the central nen.ous system which 
are not susceptible to correcti\e inter- 
vention. 

(3) "Dangerous to himself or others'' has the 
meaning specified in G.S. 122C-3(11). 

(4) "Geriatric clients" means persons 65 years 
old or over who present themsehes or are 
referred for hospital admission. 

(5) "Hospital" means one of the regional psy- 
chiatric hospitals of the division. 

(6) ".Mental illness" has the meaning specified 
in G.S. 122C-3(21). 

Statutoty Authority G.S. I22C-3: I43B-I47. 

.0117 ADMISSIONS FROM SINGLE 
PORTAL AREAS 

Wlien an individual from a single portal area 
presents himself or is presented directly at the 
hospital for \oluntar\" admission or involuntary' 
commitment, such admissions or commitments 
shall be handled in accordance with G.S. 
122C-211(e) and 122C-261(f) unless 122C-262 
applies. 

Statutory' Authority G.S. l22C-2ll(e); 
l22C-26l(fi: I22C-262: 143B-I4-. 

.01 18 WRITTEN REQLEST FOR 



VOLUNTARY ADMISSION 

The individual or his legally responsible person 
as defmed in G.S. 122C-3(20) shall sign a wntten 
request for voluntary admission before the client 
is evaluated for admission. 



Statutory Authority G.S. 
1 43 B- 147. 



.0119 



122C-3; I22C-21I; 



WRITTEN EVALUATION BY AREA 
PROGRAM 

(a) /Vrea program staff in a single portal area 
shall evaluate each Lndi\'idual prior to referral to 
the hospital unless G.S. 122C-262 applies. The 
written evaluation shall comply with Paragraph 
(c) of this Rule. 

(b) .^rea program staff not in a single portal 
area shall use best efforts to evaluate each indi- 
vidual prior to referral to the hospital unless G.S. 
122C-262 applies. The written evaluation shall 
comply with Paragraph (c) of this Rule. 

(c) The evaluation shall be in writing and shall 
include the following: 

(1) identifying information, eg., name, ad- 
dress, age, race, etc.; 
referral source; 
presenting problem; 

medications and pertinent medical/ psy- 
chiatric information; 

name, address and phone number of le- 
gally responsible person, il~ applicable; 
legal charges pending, if applicable; and 
name of the area program staff member to 
contact for further information. 

(d) The written e\'aluation shaU accompany the 
individual to the hospital. 



(2) 
(3) 
(4) 

(5) 

(6) 
(7) 



Statutory Authority G.S. 
I22C-262: I43B-I47. 



.0120 



I22C-2I1; I22C-26I; 



ADDITIONAL INFORM.ATION FOR 
TREATMENT PL,\N 

(a) The following client information, Lf avail- 
able, shall be sent to the appropriate hospital 
admissions office within three working days of 
the client's admission or commitment to the 
hospital. 1 his information shall include but not 
be limited to the foUowing: 

(1) name of client's mental health center 
therapist and psychiatrist; 

(2) full name of client, including maiden 
name if applicable; 

(3) legal county of residence; 

(4) bulhdate; 

(5) pre.ious admissions to any state facility; 

(6) name, address and telephone number of 
the legally responsible person or ne.\t of 
kin; 



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NORTH CAROLINA REGISTER 



PROPOSED RULES 



(7) any medical problems, including pertinent 
laboratory data and treatment; 

(8) current psychiatric and other medications; 

(9) history of compliance with medications 
and after care instructions; 

(10) alternatives attempted or considered prior 
to referral to hospital; 

(11) goal of hospitalization specifying the 
treatment problem(s) that the hospital 
should address; 

(12) specific suggestions for programming and 
other treatment planning recommen- 
dations: and 

(13) release plans, which include the informa- 
tion relevant to placement and other spe- 
cial considerations of the client upon 
discharge from the hospital. 

(b) 1 he information required in Paragraph (a) 
of this Rule shall be used by hospital staff in de- 
veloping the client's treatment plan. 

(c) When there are differences of opinion be- 
tween area program staff and hospital staff re- 
garding the area program's treatment 
recommendations, the hospital staff shall notify 
the area program staff. Together the hospital and 
area program staff shall attempt to resohe these 
differences according to the procedures specified 
in Rule .0129 of this Section. 



Statutory A uthority 
l22C-S5(a); I43B-I47. 



G.S. l22C-53(a): 



.0121 KVAI I AllON BY IIOSIM I.M. FOR 
INNOI.IMARY COMMITMKNT 

Any indi\ idual brought to a hospital pursuant 
to Part 7 of Article 5 of G.S. 122C shaU be eval- 
uated for commitment. 

Statutory Authority G.S. I22C-26I through 
I22C-277: I4.W-I47. 

.0122 NOIIFICATION OF ADMISSION/ 
DENIAL TO AREA PROGRAM 

(a) In those instances where the individual has 
not been referred by an area program, the hospi- 
tal shall notify the referring agent and the appro- 
priate area program regarding the hospital's 
decision to admit or deny admission to the indi- 
vidual. Such notifications shall be made within 
the limitations specified in G.S. 122C-53(a) and 
122C-55(a). 

(b) In all instances where area program staff 
has evaluated and referred the individual to a 
hospital with a recommendation for involuntary 
commitment or voluntary admission, if the 
opinion of the examiner at the hospital is that the 
individual does not meet inpatient criteria, the 
examiner shall make reasonable efforts to contact 



area program staff to discuss the individual's 
condition prior to releasing the individual. Pro- 
vided, however, that unreasonable delay shall not 
occur as a result of the foregoing and in no event 
shall the individual be detained by the hospital 
for more than 24 hours. 

Statutory Authority G.S. 122C-132; 122C-22I; 
I22C-26I; I43B-147. 

.0123 GENERAL CRITERIA FOR 

ADMISSION/COMMITMENT 

(a) Admission staff shall evaluate the individual 
to determine that: 

(1) there is the presence or probable presence 
of mental illness; 

(2) the individual is in need of treatment or 
further evaluation at the facility; and 

(3) admitting the individual to the hospital is 
an appropriate treatment modahty. 

(b) The individual shall be a resident of the 
region served by the hospital unless one or more 
of these exceptions occurs: 

(1) A transient resident of another state who 
requires hospitalization shall be admitted 
to the hospital serving the region in which 
the client is found. 

(2) A defendant who is committed to a state 
mental health facility for determination of 
capacity to proceed to trial (G.S. 
15A-1002) may be admitted to the re- 
gional hospital that series the defendant's 
region of residence, or the defendant may 
be admitted to the Forensic Unit at Do- 
rothea Dix Hospital. 

(3) An individual whose treatment needs have 
necessitated a cross regional admission 
from the hospital in their region. Cross 
regional admissions shall be arranged by 
the deputy director for mental heahh pro- 
grams or his designee. 

(4) In case of emergency, a client may be ad- 
mitted to a hospital outside of the region 
of residence. Subsequent transfer to the 
appropriate regional hospital may be ini- 
tiated in accordance with G.S. 122C-206. 

(5) A client from any catchment area of the 
state may be considered for admission to 
the Clinical Research Unit of Dorothea 
Dix Hospital. In the case of a client of 
another regional hospital, apphcation 
shall be made in accordance with G.S. 
122C-206. 

(c) An individual shall not be admitted to a 
hospital if: 

(1) the person has chronic fixed organic con- 
ditions for which no psychiatric treatment 
exists and who is primarily in need of 



NORTH CAROLINA REGISTER 



631 



PROPOSED RULES 



custodial care pending rest home or nurs- 
ing home placement. However, such an 
individual may be admitted for a period 
not to exceed 60 days for observation or 
diagnostic evaluation; 

(2) the person's treatment needs can be met 
locally; 

(3) the person's admission is sought primarily 
because of a lack of living space or finan- 
cial support; and 

(4) the person's primary medical or surgical 
problem can be more appropriately 
treated in a general hospital. 

Slamory Authoritv G.S. I22C-3; I22C-206: 
I22C-26I through I22C-264; I43B-I47. 

.0124 ADMISSION CRITERIA FOR 
INCOMPKTENT ADULTS 

The guardian of an incompetent adult may ap- 
ply for the admission df the incompetent adult 
to a hospital with or without the consent of the 
incompetent adult. If the incompetent adult is 
admitted, a court hearing and judicial determi- 
nation will be scheduled according to the proce- 
dures set forth in G.S. 122C-232. In the initial 
evaluation, admission staff shall determine that; 

(1) there is the presence or probable presence 
of mental illness; and 

(2) less restrictive treatment measures are likely 
to be insufficient. In making this judgment, 
the admission staff shaU determine that: 

(a) outpatient treatment or less intensive resi- 
dential treatment measures would not al- 
leviate the mental illness; 

(b) there is no treatment program locally 
outside of the hospital that meets the 
needs of the individual; and 

(c) the individual's primary need is not foster 
care or correctional placement. 



(3) make appropriate arrangements for return- 
ing the geriatric individual to his caretaker, 
family or friend. 



Statutory Authority G.S. 90-21. 1; 
I22C-22I: I22C-223; I43B-I47. 



I22C-3; 



.0125 SPECIAL PROVISIONS FOR 
GERIATRIC INDIVIDUALS 

Prior to admitting a geriatric individual to the 
hospital, the area program shall: 

(1) carefully prepare the geriatric individual and 
his family for the admission, because of the 
increased risk involved in moving elderly in- 
dividuals; 

(2) seek an agreement from referring rest 
homes, nursing homes and boarding homes 
to readmit the geriatric individual when he 
improves; and 



Statutory Authority G.S. I22C-3; 
through I22C-264; I43B-I47. 



I22C-26I 



.0126 COORDINATION OF CLIENT CARE 

(a) Each hospital in conjunction with each area 
program shall develop a process to assure ongo- 
ing communication between the hospital and 
area program regarding clients in treatment at the 
hospital. The process shall include provisions for 
case consultation, particularly around issues re- 
lated to discharge planning. The process may 
include but is not limited to the following: 

(1) specifically designated staff at both the 
hospital and area program to facilitate 
communication; 

(2) routinely scheduled case management 
contact at hospital site; 

(3) hospital staff visitation to area programs; 
and 

(4) telephone conferences. 

(b) The process for ongoing communication 
shall be incorporated into each area program's 
written agreement with the state hospital as re- 
quired by 10 N'CAC 18J .0603 (Written Agree- 
ments with State Facilities). 

Statutory Authority G.S. I22C-I32; I43B-I47. 

.0127 NOTIFICATION OF CLIENT 
DISCHARGE 

The hospital shall give the referring area pro- 
gram 72 hours notice of planned discharge of all 
clients except that such notice may not be possi- 
ble when the chent is released by the court. If 
there is a disagreement between the hospital and 
area program regarding the planned discharge, 
the disagreement shall be resolved by the proce- 
dures specified in Rule .0129 of this Section. 

Statutory Authority G.S. I22C-II2; I43B-I47. 

.0128 PLACEMENT OF CLIENTS OUTSIDE 
THEIR COUNTY OF RESIDENCE 

(a) When a client of a hospital is to be placed 
in a facility outside his county of residence, hos- 
pital staff shall consult with staff of the area pro- 
gram which serves the county in which the client 
is to be placed prior to making such a placement. 
Consultatioii should include such issues as: 

(1) the chent's characteristics; 

(2) the area program's knowledge of the facil- 
ity being considered; and 



6i2 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



(3) the area program's assessment of the fa- 
cility's ability to manage the client being 
considered for placement. 

(b) When a client discharged from a hospital 
is placed outside his county of residence, the 
hospital shall send, at the time of discharge, the 
following records to the area program in whose 
catchment area the client is placed: 

(1) hospital's psychiatric evaluation; 

(2) social history; and 

(3) post-institutional plan. 

In addition, the hospital discharge summary shall 
be sent to that area program when it becomes 
available. 

(c) Hospital staff shall notify the area program 
that ser\'es the client's county of residence of the 
client's placement site within 72 hours of all 
planned discharges. That area program shall 
send to the area program in whose county the 
client win be placed a copy of the client's most 
recent treatment plans, medication sheets and 
other pertmcnt evaluation information in ac- 
cordance with G.S. 122C-53(a) and 122C-55(a). 

(d) The area program in whose county the cli- 
ent is placed shall provide services to that client 
on the same basis as services are provided to 
other residents of the catchment area. 

Statutory Authority G.S. I22C-3; I22C-II2; 
I22C-I17: I43D-I47. 

.0129 RKSOLLTION OF DIFFERENCES OF 
OPINION 

(a) Except as provided in Rule .0122(b) of this 
Section, differences of opinion between area 
program staff and hospital staff regarding admis- 
sion, treatment or discharge issues shall be re- 
solved through negotiation involving appropriate 
hospital and area program staff up to and in- 
cluding the area program's director and the hos- 
pital's director. 

(b) If resolution cannot be reached by the di- 
rectors of the two organizations, the issue(s) in 
dispute may be taken by either party to the ap- 
propriate regional director. 

(c) The regional director may choose to func- 
tion as mediator of the dispute or he may choose 
to refer the matter to the division director for re- 
solution. 

Statutory .Authority G.S. MSB- 147. 

CHAPTER 18 - MENTAL HEALTH: OTHER 
PROGRAMS 

SUBCHAPTER 18F - PROGRAM SUPPORT 
STANDARDS 



SECTION .0300 - SUBSTANCE ABUSE 

ASSESSMENTS FOR INDIVIDUALS CHARGED 

WITH OR CONVICTED OF DRIVING WHILE 

IMPAIRED (DWI) 

.0312 INTRODUCTION 

The purpose of the rules of this Section is to 
establish specific procedures for scheduling, con- 
ducting and reporting DWI substance abuse as- 
sessments. Such assessments may be sought 
either voluntarily on a pre-trial basis or by order 
of the presiding judge. These rules apply to all 
facilities licensed by the State as an alcoholism 
and substance abuse treatment facihty or a facil- 
ity excluded from licensure under G.S. 122C-22 
which wish to perform DWI substance abuse as- 
sessments. In addition, aU DWI substance abuse 
assessments shall be implemented as required by 
the provisions of G.S. 20-179(m). 

Statutory Authority G.S. 20-l79(e)(6) and (m). 

.0313 DEFINITIONS 

For the purpose of the rules in this Section, the 
following terms shall have the meanings indi- 
cated: 

(1) "Alcohol and Drug Education Traffic 
School (ADETS)" means a 
prevention/intervention service which pro- 
vides an educational program primarily for 
first offenders convicted of driving while im- 
paired. This service is designed to reduce 
the recidivism rate for the offense of driving 
while impaired. 

(2) "Clinical Interview" means the face-to-face 
interview with a substance abuse profes- 
sional intended to gather information on the 
chent, including, but not limited to the fol- 
lowing: demographics, medical history, le- 
gal history, social and family history, 
substance abuse history, vocational back- 
ground and mental status. 

(3) "DMH Form 508 (DWI Services Certificate 
of Completion)" means the four-page form 
which is used in documenting the offenders 
completion of the DWI substance abuse as- 
sessment and/or compliance or non-compli- 
ance of ADETS as appropriate. 

(4) "DWI" means driving while impaired as 
defined in G.S. 20-138.1. 

(5) "DWI Substance Abuse Assessment" me- 
ans a service provided to persons charged 
with or convicted of DWI to determine the 
presence of chemical dependency. The as- 
sessment involves a clinical interview as well 
as the use of a standardized test. 

(6) "Standardized Test" means a written test 
approved by DHR, with documented reli- 
ability and validity, which serves to assist the 



NORTH CAROLINA REGISTER 



633 



PROPOSED RULES 



assessment agency or individual in deter- 
mining if the client is chemically dependent. 
(7) "Substance Abuse Handicap" means a 
moderate to severe degree of dysfunctional- 
it\ directly related to the recurring use abuse 
of an impainng substance. 

Statu! on- Authority GS. 20-138.1: 20- T 9. 

.0314 \VRH TKN NOTICE OF INTENT 

Written notice of intent to provide DWI sub- 
stance abuse assessments is required per G.S. 
2U-179(m). The assessor shall send such notifi- 
cation to both the area authority in that partic- 
ular catchment area and the Department of 
Human Resources at the following address: 
DWT Criminal Justice Branch, Di\ision of Men- 
tal Health. Mental Retardation and Substance 
Abuse Ser\ices, 325 N. Salisbur.' Street. Raleigh, 
NC 2761 1. The notice of intent shall be docu- 
mented on agency letterhead and shall include at 
a minimum the following: 

( 1) declaration of intent: 

(2) statement of wiUingness to follow rules for 
conducting such assessments as adopted by 
the Department of Human Resources; 

(3) license number issued by the Di\'ision of 
Facility Services, or by licensmg boards as 
referenced in 122C-22: and 

(4) signature of the administrator in charge. 

Statutory Authority G.S. 20-/^9,'m;; /:2C-22. 

.0315 D\M SLBST ANCE .VBLSE ASSESSMENT 
ELEMENTS 

(a) DWI substance abuse assessments shall 
only be pro\'ided by a facility licensed by the state 
as an alcohohsm and substance abuse treatment 
facility as specified in 10 NC.AC 14K .0365 or a 
facilitv excluded from licensure under G.S. 
122C-22. 

(b) .\ clinical interview shall be conducted with 
the individual to collect information regarding 
his/her use of alcohol and other drugs. 

(c) In addition to the cHnical inten-iew. the 
agency or individual pcrfonning the assessment 
shall administer to the indi\'idual a standardized 
test appro\ed b>" the Department of Human Re- 
sources to determine alcohol and or drug de- 
pendency. 

(d) The agency or individual performing the 
assessment shall have the individual execute the 
appropriate release of information form per 42 
CFR, Part 2 gi\'ing the assessing agency permis- 
sion to report its tlndings to the Duision of 
Mental Health. Mental Retardation and Sub- 
stance Abuse Services, the Di\ision of Motor 
Vehicles, the Court, the Department of Cor- 



rection and the agency providing the recom- 
mended treatment and, or education. 

Statutory Authority G.S. 20-J79fm); 122C-22. 

.0316 QUALIFICATIONS OF INDIVIDUALS 
PERFORMING ASSESSMENTS 

Staff members of agencies or individuals in pri- 
vate practice fx;rforming D\\T substance abuse 
assessments shall have the following qualifica- 
tions: 

(1) certification as a certified alcoholism, drug 
abuse or substance abuse counselor as de- 
fmed by the Department of Human Re- 
sources; 

(2) graduation from high school or equivalent 
and three years of supervised experience in 
the profession of alcohol and drug abuse 
counseling, or graduation from a four-year 
college or uni\er5ity and two years of su- 
pervised experience in the profession of al- 
cohol and drug abuse counseling; or 

(3) licensure by the N.C. Board of Medical 
Examiners or the N.C. Board of Examiners 
of Practicing Psychologists. 

Statutory Authority G.S. 20-l79(m). 

.0317 RESPONSIBILITIES OF .\SSESSING 
AGENCY 

(aj Following the completion of the assess- 
ment, the agency or mdividual performing the 
assessment shall inform the individual if treat- 
ment, education or both is recommended. 

(b) If treatment, education or both is recom- 
mended the indi\idual shall be made aware of the 
a\ailable treatment and education facilities, both 
private and public, which provide the type of 
treatment or education recommended. 

(c) In addition, the agency or mdi\'idual per- 
forming the assessment shall inform the individ- 
ual of the possible consequences of failing to 
comply with recommended treatment and or ed- 
ucation. 

Siatutorj- Authority G.S. 20- 179 (m). 

.0318 RESPONSIBILITIES OF TRE.ATMENT/ 
EDUC.VnON PROVIDERS 

fai A wntten plan shall be developed by the 
facility providing the recommended treatment or 
education to insure that the individual under- 
stands the requirements of the particular treat- 
ment or education servicefsj in which they are 
enrolled. 

(b) Individuals shall not be denied the oppor- 
tunity to complete the ser\'ice(s') recommended 
bv the assessing aaencv. 



6i4 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



(c) The facility providing the recommended 
treatment or education shall have the individual 
execute the appropriate release of information 
giving that facility permission to report the cli- 
ent's progress to the Division of Mental Health, 
Mental Retardation, and Substance Abuse Ser- 
vices, the Division of Motor Vehicles, the Court 
and the Department of Correction. 

(d) Identification of a substance abuse hand- 
icap shall be considered indicative of the need for 
treatment. In such instances, educationally-or- 
iented and/or support group services shall only 
be provided as a supplement to a more extensive 
treatment plan. 

(e) If treatment is recommended and required 
per the court's judgement, such treatment shall 
be provided by a facility hccnsed by the state for 
the provision of such services. In addition, a 
client record shall be opened on each client re- 
ceiving treatment. 

Statutory Authority G.S. 20-/79(mJ; J22C-26; 
1 43 B- 1 47. 

.0319 RKPORTING REQUIREMENTS 

(a) The assessment portion of the DMH Form 
508 shall be completed on each client who re- 
ceives a DWI substance abuse assessment. An 
initial supply of this form may be obtained from 
the DWI/Criminal Justice Branch of the Division 
of Mental Health, Mental Retardation, and Sub- 
stance Abuse Services, 325 N. Salisbury Street, 
Raleigh, N.C. 27611. 

(b) The assessment portion of DMH Form 508 
shall be signed by a certified alcoholism, drug 
abuse or substance abuse counselor, as defined 
by the Department of Human Resources. The 
date of expiration of that professional's certif- 
ication shall be indicated on the client's Certif- 
icate of Completion. 

(c) If treatment, education or both is recom- 
mended, all four pages of the DMH Form 508 
shall be forwarded to the facUity providing the 
recommended treatment or education. 

(d) In the event that no substance abuse han- 
dicap is identified and no treatment or education 
recommendations are made, the assessing agency 
shall forward the copies of DMH Form 508 as 
specified in Paragraph (g) of this Rule. 

(e) The facility providing the recommended 
treatment or education shall have the client sign 
the appropriate release of information, and pro- 
gress reports shall be filed with the court or the 
Department of Correction at intervals not to ex- 
ceed six months. 

(f) If treatment and ADETS have been recom- 
mended, and the individual does not successfully 
complete the requirements of the ADETS, a 



copy of the top sheet of DMH Form 508 show- 
ing non-compliance shall be forwarded to the 
DWI/Criminal Justice Branch, the Division of 
Mental Health, Mental Retardation, and Sub- 
stance Abuse Services. All four pages of the 
DMH Form 508 shall be retained by the facility 
providing the recommended treatment service(s) 
until such service(s) are completed. 

(g) Upon completion of the recommended 
treatment or education service(s), the top page 
of the completed DMH Form 508 shall be for- 
warded to the DWI/Criminal Justice Branch, the 
Division of Mental Health, Mental Retardation, 
and Substance Abuse Services. The agency shall 
also retain the appropriate page of the form and 
distribute the remaining pages to the offender and 
the court as specified on the bottom of the form. 
The agency providing the service(s) shall retain 
their copy of this form for a period of not less 
than five years. 

(h) In the event that an assessment or treat- 
ment agency ceases providing DWI related ser- 
vices, it shall be the responsibility of that agency 
to notify the DWI Criminal Justice Branch in 
writing to assure that all DMH Form 508 forms 
and other related documents specified in G.S. 
20-179(m) are properly processed. 

Statutory Authority G.S. 20-l79(m). 

.0.^20 PRE-TRIAL ASSESSMENTS 

(a) A DMH Form 508 shall be completed on 
each individual who voluntarily refers himself or 
herself for a DWI assessment, under the pro- 
visions of G.S. 20- 179(e)(6). However, the 
DMH Form 508 shall not be used to report the 
results of the pre-trial assessment to the court or 
attorney. The results shall be summarized in a 
concise, easy to interpret fashion on agency let- 
terhead and signed by the individual who per- 
formed the assessment. The DMFI Form 508 
shall be retained by the assessor and completed 
as specified in (b) and (c) of this Rule. 

(b) The individual shall be made aware that it 
is his/her responsibility to notify the agency or 
individual that performed the assessment of the 
outcome of his/her trial so that the DWI Form 
508 can be forwarded to the appropriate party. 

(c) In the event that the individual is found not 
guilty of DWI or the individual fails to notify the 
agency or individual that performed the assess- 
ment within 12 months of the assessment, the 
assessing agency shall forward the DMH Form 
508 to the Division of Mental Health, Mental 
Retardation, and Substance Abuse Services' 
DWI/Criminal Justice Branch Chief at the ad- 
dress specified in Rule .0315 of this Section. 



NORTH CAROLINA REGISTER 



635 



PROPOSED RULES 



Statutory Authority G.S. 20-l79(e)(6) and (m). 
SLBCIIAI'TKR I8VI - REQUIRED SERVICES 

SECTION .1200 - PROVISIONS OF SOCIAL 

SETTING: NONIIOSPn AL MEDICAL OR 

OUTPATIENT DETOXIFICATION SERVICES 

FOR INDIVIDUALS WHO ARE ALCOHOLICS 

.1203 INTRODUCTION 

Detoxification is a basic service of the alcohol 
aiid drug abuse treatment system. Certain indi- 
vidu;ils in need of alcohol or other drug abuse 
detoxification can be safely withdrawn from al- 
cohol or other drugs in a setting other than a 
hospital such as on a social setting, nonhospital 
medical or an outpatient basis. These are indi- 
\iduals who do not have psychiatric problems 
or physical conditions either of which may be- 
come life tltreatening during the course of detox- 
ification. 

Statutory Authority G.S. 1 43 B- 1 47. 

.1204 PROMSION OFSERMCES 

Each area program shall provide or secure at 
least one of the models of social setting, non- 
hospital medical or outpatient detoxification ser- 
vices as delineated m 10 NCAC 14N .0200, .0300 
and .0400. 

Statutoty Authority G.S. /43B-i47. 

TH LE 1 1 - DEPARTMENT OF 
INSURANCE 



ly otice is hereby given in accordance with G.S. 
1 SOB- 1 2 that the Department of Insurance intends 
to adopt rules cited as II NCAC 6 A .0220 -.0237, 
.0412, .0413, .0506. .0507. and .0701 - .0706; 
amend rules cited as II NCAC 6 A .0/01. .0201. 
.0210 - .0217. .0219: .0301 - .0306. .040/ - .0408. 
.04/0. .050/ - .0505. and .060/ - .0604; and repeal 
rules cited as II NCAC 6 A .0202 - .0207. .0409, 
.04//, and .0605. 



Th 



he proposed effective date of this action is Fe- 
bruaiy /. /9S9. 

1 he public hearing will be conducted at /0:00 
a.m. on November /4, 1988 at Third Floor Hear- 
ing Room. Dohhs Building, 430 N . Salisbury 
S'trcet. Raleigh. N.C. 276//^'. 



Anyone having questions should call Cynthia 
O' Daniel at (9/9 J 733-7487, or Linda Stott at 
(9/9) 733-4700. 

CHAPTER 6 - AGENT SERVICES DIVISION 

CHAPTER 6A - AGENT SERVICES DIVISION 

SECTION .0100 - GENERAL PROVISIONS 

.0101 DEFINITIONS 

In this Chapter, unless the context otherwise 
requires: 

(1) "Agent I.ic e n '. ing Services Division" or "Ae 
division Division" shall mean the Agent 
Services Division of the North Carolina 
Department of Insurance, the disioion Divi- 
sion responsible for the licensing, education 
and regulation of agents and other licensees. 
matters dealing with insurunoo agents aft4 
agencies. 

(2) "Company" shall mean any insurance 
company properly licensed to do business in 
this state and shall further be defmed as in 
G.S. 58-2 (3), 

(3) "Local agent" shall mean aft agent whose 
sele responsibility is fe* himself ta the direct 
solicitation e4^ insurance business. "Home 
State" or "State of Residency" shall mean 
the state in which the licensee is responsible 
for payment of state income tax, would be 
under judicial authority in event of criminal 
action or would be eligible to vote in a gen- 
eral election. 

(4) "Agent" shall mean a local agent as defmed 
m 44 NCi\C 6 .0101 Bf a general ag e nt as 
defin e d m G.S. 5 8 39. '1. "Professional 

■ Testing Service" shall mean the organization 
specializing in the development and admm- 
istration of licensing examinations on a 
contract basic. 

(5) "State Licensing Examination" or "Exam- 
ination" shall mean a collection of questions 
designed to test the applicant's knowledge 
of the basic concepts, principles and laws 
relevant to the insurance profession to de- 
termine the competence to be licensed in 
North Carolina. 



Co 



'Omment Procedures: Written comments may 
be sent to Cynthia O'Danie/, Agent Senices Divi- 
sion, P.O. Box 263S7. Raleigh. N.C. 276//. Oral 
presentations may be made at the public hearing. 



(4) (6| The singular shall include the plural and 
the masculine shall include the feminine 
wherever appropriate. 

Statutory Authority G.S. 58-615 (e J (hj. 

SECTION .0200 - DESCRIPTION OF FORMS 

.0201 GENERAL INFORMATION 

All forms f»f application f»f examination fof li- 
cense, application fe* hconse, pertaining to licen- 



636 



NOR TH CA R OLINA R EG IS TER 



PROPOSED RULES 



sure including applications bonds, appointments, 
termination of appointments rono' . ' i 'al »f license, 
oanoL'Uation &i liconoo, permits for examinations 
and other forms necessary for the daily operation 
of the division in fulfilling its purpose shall be 
supplied by the division. In addition, the divi- 
sion will Gupply provide instructions for proper 
completion of all forms. 

(1) Forms shall be completed in full and must 
contain necessary signatures in order to be 
accepted. Companies and applicants shall 
submit all forms or complete other require- 
ments within time schedules established by 
the division. 

(2) Companies or applicants that are author- 
ized to duphcate forms must do so without 
alteration or modification thereto. 

(3) If any additional supporting documents, 
information or fees are required, they shall 
be submitted with the appropriate forms or 
applications. 

Statutory Authority G.S. 58-9. 



.0202 
.0203 
.0204 

.0205 



.0206 
.0207 



FORM A-1 (REPEALED) 

FORM A-2 (REPEALED) 

APPLICATION FOR BROKER'S LICENSE 

(REPEALED) 

LICENSE APPLICATION FOR MOTOR 

VEHICLE DAMAGE APPRAISERS 

(REPEALED) 

EXAMINATION PERMIT (REPEALED) 

FAILURE LETTER-PERMIT (REPEALED) 



Statutory Authority G.S. 58-9; 58-40; 58-40.2; 
58-40.6; 58-41.1; 58-44.2; 58-268. 

.0210 N. C. RESIDENT BROKER'S 
INSURANCE BOND 

The "North Carolina Resident Broker's Insur- 
ance Bond" Inouranco Brolcoro' form shall in- 
clude the name of the principal, name of the 
surety, date and conditions of bond, bond num- 
ber, ti+e amount of the bond, (oinglo afi4 aggro 
gate claim amountc), appropriate signatures and 
other pertinent information and must be accom- 
panied by a power of attorney. 

Statutory Authority G.S. 58-6I5(f)( 1 ). 

.021 1 N. C. NON-RESIDENT BROKER'S 
INSURANCE BOND 

The "North Carolina Inouranco Non- Resident 
Broker's Insurance Bond" fomi shall include the 
name of the principal, name of the surety, 
amount ef bond, date and conditions of A« 
bond, bond number, amount of the bond, 
amount ef total aggrogato habihty, appropriate 



signatures and other pertinent information and 
must be accompanied by a power of attorney. 

Statutory Authority G.S. 58-61 5(f)( 1 ). 

.0212 LICENSES 

All licenses liconoo forms shall include the name 
of the licensee agont, broker, adjuster &f h*s4&p 
vohiolo damage ap praiser, type of license, b*iing 
issued, kind of insurance covered by the license, 
date of issuance, dat« »f expiration, a mount ©f 
licens e fe» name of company represented, where 
applicable, and terms of the license. In addition, 
all licenses shall bear the signature of the com- 
missioner. 

Statutory Authority G.S. 58-9; 58-614(1). 

.0213 SELF-EMPLOYED ADJUSTER 
RENEWAL APPLICATION 

The "Self-Employed Adjuster Renewal Appli- 
cation" shall state include the year for which the 
License is being renewed, the date the license will 
be cancelled if the renewal application is not re- 
ceived by the division, amount of license renewal 
fee, signature, personal information, name ©f ike 
adjuster, address aft4 birthdate ei y+» adjuster, 
instructions for proper completion and return of 
the application and other pertinent information. 

Statutory Authority G.S. 58-6 I4(n); 58-6 1 5(a). 

.0214 MOTOR VEHICLE DAMAGE APPRAISER 
RENEWAL APPLICATION 

The "Motor Vehicle Damage Appraiser Re- 
newal Application" shall include the year for 
which the license is being renewed, the date the 
License will be cancelled if the renewal application 
is not received by the division, amount of license 
renewal fee, signature, personal information, 
nam a aft4 address ©f the appraiser, instructions 
for proper completion and return of the applica- 
tion and other pertinent information. 

Statutory Authority G.S. 58-614(n); 58-615(a); 
58-634. 

.0215 RESIDENT BROKERS APPLICATION 

A The "Resident Broker ^ Renewal Applica- 
tion" shall include the personal information, 
name aft4 address ©f A« broker, license fee, sig- 
nature of the applicant and other information to 
aid the division in determining the qualification 
of the applicant, date ©f cancellation ©f p5=»s#R^ 
lic e ns e if tfee application is ft©4- r e c e iv e d by tii* 
division, ti*e amount ©f license feev instructions 
fof proper completion afi4 return ©f tl*e appiisa- 
tion, aB4 other pertinent information. This form 
is used for both new and renewal applicants. 



NORTH CAROLINA REGISTER 



637 



PROPOSED RULES 



Statutory Authority G.S. 58-6l4(n): 58-6/5(a); 

58-615 (h)(1). 

.0216 NON-RKSIDENT BROKERS 
APPLICATION 

The " RoriL>wal Application fof Non-Resident 
Brokers' I icoiiijO form Ciholl inoludo riw individ 
uul's namo, namii ef finn, mailing addreon, typo 
licontH * applied fofr amount »f liconoo fe^ oondi 
tions »f holding th# licunoo, aftd othor portinont 
infonnution. Application" shall include personal 
infonTiatu)n, license fee, si.t^ature of the appli- 
cant and other infonnation to aid the division in 
detenninmg the qualification of the appUcant and 
must be accompanied by a Home State (Certif- 
ication. 1 his form is used for both new and re- 
newal applicants. 

Statutory Authority G.S. 58-6 1 4(n); 58-6 1 5(a); 
5S-6l5(h)(2). 

.0217 NORTH CAROLINA CANCELLATION 
FORM 

"The North CaroUna Notice of Cancellation" 
A "Roquo ' it fof CanoL'llation »f iVgonts ef 
AdjuL . torio)" form shall include name of the 
company, address of the company licensing of- 
fice, name of the 1 imitcd Representative or Ad- 
juster, At* effecti' . e drrit* ef oanccllution »f liconoo, 
t+h* name wf thi* iiTairanoo company m*4 addrt ' ; . ;) 
t4 tl*t» company hcon i jing otTioo, namo ©f agent 
Bf adju - iter. type of license to be being canceUed, 
company IBM number, afi4 signature of author- 
ized company representative as vveii as other and 
other pertinent information. 

Statutory Authority G.S. 58-620(a)(b). 

.0219 APPLICATION TO DETERMINE 

ELIGIBILITY DESIGN.VIED AGENT 

The "Application to Determirx; Fli.dbility for 
Designated Agent" dij 'i ignutod agent application 
form shall include the name and address of the 
agent aft4 hi* agency and e\idence that the agent 
has satisfied the statutory requirements set out in 
G.S. 58-248. 33(g)(6). This form must be signed 
by the applicant and notarized. 



Statutory Authority G.S. 58-248.33(g)(6). 

.0221 CANDIDATE GUIDE 

The "Candidate Guide Application" shall re- 
quire the applicant to provide personal irvforma- 
tion, type of examination to be taken, signature 
of authorized company representative when ap- 
plicable, and other information to aid the divi- 
sion in determining if the appUcant is qualified to 
take the examination for which he is applying. 

Statutory Authority G.S. 58-6l5(a). 

.0222 NORTH CAROLINA INSURANCE 
LICENSE APPLICATION 

The "North Carolina Insurance License Appli- 
cation" for an agent shall include personal infor- 
mation, type of license applied for, signature of 
applicant, and other information to aid the divi- 
sion in determining what Ucense should be issued 
and if the applicant is qualified for that license. 

Statutory Authority G.S. 58-6I5(a). 

.0223 NORTH CAROLINA LIMITED 

INSURANCE REPRESENTATIVE 
APPLICATION 

The "North Carolina Limited Insurance Rep- 
resentative Apphcation" shall include personal 
infonnation. type of license appUed for, company 
number, signature of the applicant and the au- 
thorized company representative, and other in- 
formation to aid the division in determining what 
license should be issued and if the apphcant is 
qualified for that license. 

Statutory Authority G.S. 58-615 (a). 

.0224 ADJUSTER AND APPRAISER N. C. 
LICENSE APPLICATION 

The "Adjuster and Appraiser N.C. License Ap- 
phcation" shall include the personal information, 
type of license apphed for, company number and 
signature of authorized company representative 
when applicable, signature of apphcant, and 
other information to aid the division in deter- 
mining what license should be issued and if the 
apphcant is qualilied for that Ucense. 



Statutory Authority G.S. 58-9: 58-248.33(g) (6). statutory Authority G.S. 58-61 5(a). 



.0220 DESIGNATED AGENT BOND 

The "Designated .Agent Bond" shaU include the 
name of the principal, name of the surety, date 
and conditions of the bond, bond number, 
amount of the bond, appropriate signatures and 
other pertinent information and must be accom- 
panied by a power of attorney. 



.0225 APPOINTMENT OF NORTH CAROLINA 
AGENT 

The "Appointment of North CaroUna Agent" 
form shall include personal information, insur- 
ance authority for which appointed, company 
number, effective date of the appointment, sig- 
nature of authorized company official and other 



6iS 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



information to aid the division in the recording 
of the appointment. 

Statutory' Authority G.S. 5S-6l7(b)(c). 

.0226 TFRNilNATION OF NORTH CAROLINA 
AGEN I APPOINTMENT 

The "Termination of North Carolina Agent 
Appointment" form shrill include personal infor- 
mation, insurance authority being terminated, 
signature of autliorized company oificial, com- 
pany number, cflective date of termination, and 
other infonriation to aid in the recording of the 
termination of authority. 

Statutory Authority G.S. 5S-6l7(e). 

.0227 APPLICATION LOR LICENSE TO 

REPRESENT A PLRCIIASING GROLP 

An "Apphcation for License to Represent a 
Purchasing Group" shall ii.dude the name of th.' 
purchasing group, personal information about 
the applicant, conditions of license, signature "*" 
applicant and other information to aid the divi- 
sion in determining the qualification of the ap- 
plicant and must be accompanied by a Home 
State Certification. 

Statutory Authority G. S. 58-516: 5S-6l5(a). 

.0228 BOND (FORM B) PG-2 

This form is used only in licensing a represen- 
tative for a Purchasing Group. The "Bond 
(Form B)" shall include the name of the princi- 
pal, bond number, the name of the surety, the 
amount of the bond, conditions of the bond, 
appropriate signatures and other pertinent infor- 
mation. A power of attorney must accompany 
this bond. 

Statutory Authority G. S. 5S-433{b)(4). 

.0229 NORI II CAROLINA INSURANCE 
AGENT- LICENSE APPLICAl ION 
RISK RETENTION 

The "North Carolina Insurance Agent - License 
Application Risk Retention" shall include per- 
sonal information, type of license, signature of 
applicant and other information to aid the divi- 
sion in determining if the applicant is qualified 
for that license and must be accompanied by a 
Home State Certificate. 

Statutory^ Authority G. S. 5S-5J6. 

.0230 APPOINTMENT OF NORTH CAROLINA 
AGENT - RISK RETEN LION 

The "Appointment of North Carolina Agent - 
Risk Retention" shall include personal informa- 



tion, insurance authority for which appointed, 
company name and number, effective date of 
appointment and authorized signature of com- 
pany official. 

Statutory Authority G. S. 58-6/7. 

.0231 TERMINATION OF NORTH CAROLINA 
AGENT - RISK RETENTION 

The "Termination of North Carolina Agent - 
Risk Retention" shall include personal infonna- 
tion, the kind of insurance authority being ter- 
minated, company name and number, effective 
date of termination of appointment, and signa- 
ture of company official. 

Statutory Authority G.S. 58-6 17(e). 

.0232 APPLICATION LICENSE 1 O REPRESENT 
SLRPLLS LINES INSURER 

Lhe "Applicatiuu for License to Represent 
Surplus Lines Insurer (Form SL) ' shall include 
j^^rsonal information and other pertinent infor- 
mation to aid the division in determining if the 
applicant is qualified for that license, as well as 
conditions for the issuance of the license. It must 
be signed by the applicant and notarized and in- 
clude three endorsements. 

Statutory Authority G.S. 58-433(b)(2j. 

.0233 BOND (FORM B)SL-2 

The "Bond (Fonn B) SL-2" shall include the 
name of the principal, bond number, name of the 
surety, amount of bond, date and conditions of 
the bond, appropriate signatures and other perti- 
nent information. A power of attorney must 
accompany this bond. 

Statutory Authority G.S. 5S-433(b)(4). 

.0234 RENEWAL APPLICATION FOR LICENSE 
TO REPRESENT A SURPLUS LINES 
INSURER 

The "Renewal Application for License to Rep- 
resent a Surplus Lines Insurer (Form SL-1)" 
shall contain personal information and other 
pertinent information to aid the division in de- 
termining if the applicant's license should be re- 
newed. It must be signed by the applicant and 
notarized. Lhe applicant must be a member of 
a professional association at the time of applica- 
tion for renewal. 

Statutory Authority G.S. 58-42S(d); 5S-433(d). 

.0235 CORPOR,\TE SURPLUS LINES 
APPLICATION 



NORTH CAROLINA REGISTER 



639 



PROPOSED RULES 



The "Corporate Surplus lines Application" 
shall contain pertinent information concerning 
the corporation, the names of surplus lines li- 
censees within the corporation and conditions for 
the issuance of the license and shall include ap- 
propriate signatures. This form is used for both 
new and renewal applicants. 

Statutory^ Authority G.S. 5S-433(c )(d). 

.02.^6 .M'PI.ICAI ION FOR CORPORATK/ 

J'ARINKRSHIP INSl RANGE LICENSE 

The "Application for Corporate Partnership 
Insurance L icense" shall contain pertinent infor- 
mation concerning the corporation partnership 
and other information that is rele\ant in aiding 
the di\ ision in determining if the applicant meets 
cligibiLity requirements for licensing. The appli- 
cation must be signed by all otlicers partners and 
notarized. This form is used for both new and 
renewal applicants. 

Statutory Authority G.S. 5S-6l4(h); 58-6l5(a). 

.0237 F OREIGN MILITARY SALES .VGENT 
LICENSE .M'PLICATION 

The "Foreign Military Sales Agent License Ap- 
plication" shall include personal infonnation, 
company name, number and address, signature 
of applicant and authorised company represen- 
tative, a ccrtiticate signed h\ an officer of the 
company, and other information to aid ihe divi- 
sion in determining if the applicant is qualified 
for the License. 

Statutory Authority G.S. 5S-6/2. 

SECTION .0300 - EXAMIN.VLIONS 

.0301 TYPES OF EXAMINAFIONS 

Types of examinations administered for licens- 
ing hy- t+h? di>i '. ion are I ife, /Occident and Health; 
Fire and Casualty; -\uto Physical Damaae; .\d- 
justcrs: Hail .Adjusters: Hospital; Dental; Title; 
and Sun''His 1 ines. W(*7 uccidi. ' nt a«4 health . 
combiniition lifL> accidijnt a«4 health, 6ft» a«4 
ca '. ualty. auti> plv i' ical damage adju 'i ttTr . , haii 
adjuster ' .. luT . pital. dented. t++ii* aft4 variable af»- 
nuity aft4 ' ' . uqilu > : . linoo. Addition;d examinations 
may be created and administered at the discretion 
of the commissioner. 



Statutory 
5S-6I5('e). 



Authority G.S. 58-433(b)(3); 



.0302 FORM OF EXAMIN.VTIONS 

All examinations shall be written and may be in 
objective or essay form. Fxcoptionc . »» t4«t- a 
A physical!}" handicapped individual whose abil- 



ity to write is impaired or lost Hwy ^ve sxam 
ination answors orally and a visually handicapped 
poroono may individual may have ih# e xamina 
tiono F©a4 aloud to them ftft4 may ^v^ oniiworo 
orally, special assistance from other individuals 
acting as readers or recorders. Vifjually hand 
icappad porsono should provido thoir »w» r e ad 
ef&T Apphcants requiring special assistance must 
request m wnting such assistance bv the filing 
deadline of the examination. Venfication of 
handicaps and a statement of all assistance 
needed must be included at the time of applica- 
tion. 

Statutory Authority G.S. 5S-615(e). 

.0303 SCHEDLLE OF EXAMINATIONS 

The division will pubUsh or cause to have pub- 
lished the current schedules of examinations. 
The schedules shall include day, time and lo- 
cation of exammation. rv» e xaminations are 
gi%'L'n »R otato hohdavf . . A candidate may tek« 
the examination at- hi* con^enienco, pro' i 'idod 
A*t it- itr Viithin ^ dayo 84^ icouanoo »f aft oxom 
ination ponnit. The commissioner may set other 
special times for examinations in addition to 
those listed on the current examination schedule. 
An applicant who cannot take the examination 
on a scheduled examination date for religious 
reasons may request an indi\ idually administered 
test. Such a request must be m writing bv the 
applicant's religious ad\isor and sent with the 
appHcation for examination and licensure. Indi- 
\iduallv administered examinations are gi\en 
only on a pre-registered basis. 

Statutory Authority G.S. 5S-6I5(e). 

.0304 RESPONSIBILITY OF APPLICANT 
XT EXAMIN.VLION SITE 

Applicants are responsible at the examination 
site for the following: 

the permit to trtke the examination. \\'hen 
se- instructed by t4*# examiner, the applicant 
must sia* aR4 date the permit. i\ppHcants 
>vho expect te- tafe* aftv e.xamination aftd 
ssho have fH»t received their exammation 
p e nnit shall contact the licensing division at 
least twe fott working day* prior te the e?i- 
pected examination date. Applicants who 
ha\e pre-registered and who ha\e not pre\i- 
ouslv failed the same examination must 
bring t£ the examination site the ticket of 
admission and two forms of proof of iden- 
tity. 
(2) i\pphcant must have a company ch e ck, 
mad e payable t» the > . "orth Carohna fte- 



640 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



partmont ef Insuranc e , i» the amount ef 
proper licLmso fee as Dpuuiriod m G.S. 
105 228.7. Applicants who wish to take the 
examination on a walk-in basis and who 
ha\e not previously failed the same exam- 
ination must bring to the examination site a 
properly completed application, tvyo forms 
of proof of identity and proper fees. 

(3) Applicant must hase propter idontification, 
preferably a drivor'o lioonoo »f oome form ef 
idontificution that- has a photograph ef t4*« 
applicant. Applicants who ha\e previously 
failed an examination may retake the exam- 
ination in accordance with instructions fur- 
nished by the commissioner and must pay 
applicable fees for each administration. 

(4) i\pplicanto must arrivo at- th« oxomination 
sfte at- t4*e time opocifiod tm the curr e nt »«- 
amination schodulo. A4i oKaminations ¥rili 
begin promptly. |\C1P Reg. >r&T ¥^ Ex- 
amination fees must be paid by company 
check, certified check or money order. 
[Examination fe<» G.S. 58 615( 1) aft4 regis 
tration fees GtSt 58 63 - 1 (o)| 

(5) Applicants taking the Life, Accident and 
Health or [-"ire and Casualty examination are 
required to bring to the examination site a 
Prelicensing Course Completion Certificate 
indicating that the applicant has successfully 
completed the mandatory Prelicensing I du- 
cation requirements as specified in G.S. 
58-61 5(d)(2). The Prelicensing Course 
Completion Certificate is valid for 12 
months from the date of course completion. 

(6) No applications will be supplied at the ex- 
amination site for completion by appHcants; 
nor will required supplies be furnished to 
applicants. 

(7) Applicants must arrive at the examination 
site at the time specified in the current cx- 



amination schedule. 



Statutory A uthority 
58-6l5(e); 58-634. 



G.S. 5S-6 / 5 (d)(2), ■ 



.0305 ADMINISTRATION OF EXAMINATION 

Applicants should expect the examination to be 
administered using, among others, the following 
procedures: 

(1) Applicants shall present examination pef- 
fmh company check fof license fee and 
proper id e ntification te- the staff examiner 
when se- in ;. truct e d. to the test site person- 
nel upon request the applicable items de- 
scnbed m n_ NCAC 6A .(1304 H) through 

(21. 

(2) Applicants should follow carefully all in- 
structions given by the staff e xaminer, ex- 



amination proctors, particularly when 
completing the answer sheet. 

(3) Exominationo afe considered te be »f a 
continuouo nature sa*4^ therefore, t4*e appli 
eafit should »e* loavo tfee room svithout 
pormission from the staff e xaminor. Appli- 
cants are not permitted to take calculators, 
textbooks, other books or papers into the 
examinations. Applicants found to have 
any of these materials or other aids will not 
be allowed to continue the examination. 

(4) ¥he examination ooscion wiil- last a maxi 
mum ef tlire e hours. The answer sheets 
must contain only identification data and 
responses to exam questions. No credit will 
be given to any applicant for any marks or 
answers made in the examination booklet. 

(5) tf the applicant is te take more than- eee 
examination, e ach examination must be 
tak e n separately. Applicants ¥r4H- be pef- 
mitt e d te- have efdy ewe e xamination at a 
time. -Ne more than twe examinations witt 
be given te- ene applicant during aft- e xam 
ination session. Applicants may leave the 
examination room only after obtaining per- 
mission from the examination proctors and 
handing in exam materials. No extra time 
will be allowed for examination. 



(6) tW results ef examinations w^ be given at- 
the e xamination stter Any applicant who 
gives or receives assistance during the exam- 
ination will be required to turn in all exam 
materials immediately and leave the room. 
Under these circumstances, the applicant's 
answer sheet will not be scored and the rel- 
evant facts wiU be reported by the test- pef- 
sonnel proctors to the corTm:iissioner. 

(7) An apphcant may take only one examina- 
tion on any given exam date. 

Statutory Authority G.S. 58-6/5 (e). 

.0306 APPLICATION FOR EXAMINATION 

xApplication for examination must be made 4^ 
days prior te- the date »«- ' ■ vhich the applicant 
expects te take the examination. A separate ap- 
phcation, Eorm A I, must be made fof each e^e 
aminalion t» be tak e n except fof the 
combination life accident aft4 health examina 
tion, fof which eftly- ©fie A— 1- Eorm is required. 
Eef complete instructions fof application, see 44- 
NCAC 4 S4iU- aft4 SAi^ and licensure must 
be postmarked no later than the pubUshed filing 
deadline for applicants who wish to pre-rcgister 
to take the exaimnation. A separate application 
for examination and licensure must be made for 
each examination. 



NORTH CAROLINA REGISTER 



641 



PROPOSED RULES 



Statutory Authority G.S. 58-6l5(e). 
SECTION .0400 - LICENSING PROCEDURES 

.0401 LICENSES: GENERAL PROVISIONS 

(a) G e nL'icil Provif i ions. All licenses wiii shall 
specify the Imoo kinds of insurance for which the 
agont, adjuotor »f broker Agent, Adjuster, Lim- 
ited Representative, Motor Vehicle Damage Ap- 
praiser or tJrokcr may corr)' aft4 bt* douignatud as 
local, ijL'nL ' ral ef opocial agcnto' lioonooo. ift a«J- 
diliun, t+M* foUowing general rul ia s apply: is h^ 
censed. 

(b) All licensees must be able, upon request to 
furnish e\idcnce of their licensing authority. 

f+i A« Qgont may hold a goneral ef local li- 
CLMi ' jo with »fte »f more oompcuiioo, Wt 

1 1 111 T I lU I rT^TTTT tTTTTTT ITTt 1 1 l\J Jill I IV ' 

(4f 1 lolding a upocial agent's LiG e ny .a | 

holding »f afty- other type ef lioonoo witl* 
ttfty other company. 

aft4 a» adjuc . tor'ii hoenc - e oimultaneoui i ly. 
fb-^ [c} Licenses issued by the deportment divi- 
sion are: 

(1) roL . ident e* non rocident agent; Resident 
or Non- Resident Adjuster; 

(2) reL ' ident e* non r t^ sid e nt adjuater; Resident 
or Non- Resident ."Xgent ; 

(A) company. C^onipany I'mn; 

(B) independent , Seli-l.mplovcd; 

(C) L . elf employed; Hail; 

(3) r e !^ . ident e* non remdent broker; Resident 
or Non- Resident L imited Representative, 

(4) motor delude damage appraii i er; Resident 
or Non- Resident Broker, 

(5) tiuipluo lines licK'n i T i ee. Resident or Non- 
Resident Motor Vehicle Damage Ap- 
praiser, 

(6) Surplus I ines Agent, 

(7) Corporate Surplus Lines License, 

(8) Corporate /Partnership, Agent or Limited 
Representati\e, 

(9) Purchasing Group Agent or Broker, 

( 10) Risk Retention Agent or Broker, 

(11) I'oreign Military Agent, 

( 12) remporan,- License. 

(€-^ (d]_ 1 ineii ef Iniiuiance. 44*** follo^ving linos 
ef in i. urunce afe recogni^'.od hf A« department, 
aft4 aft agent, adjuster ef broker An Agent , 
1 imited Representati\e or Broker may be h- 
censed for any one or se\'eral of thes e lines kinds 
of insurance enumerated in G.S. 58-614 upon 
meeting all qualifications: 

f3^ accident aft4 health, 

(4-^ combination lif e accid e nt aft4 health, 

(4^ fife aft4 casualty. 



f^ hospital, 
(4) dental, 

f8^ variable onnuitioo, 

(^ orodit, 
I \ n\ ,^„A.i v.e„ 

f44^ credit accident ftR4 health, 

f44^ credit life accident aft4 health, 

(44) tras'el accident aft4 baggage, 

f44) county mutuals, 

f44) fraternal organiaationo, 

f44) auto phyoioal damage, 

f4^ haii ( adjusters only), 

f4-8^ ocean marine. 

Statutory Authority G.S. 58-9; 58-614; 58-6l5(h). 

.0402 LICENSING OF RESIDENT AGENT: 
LIMITED REPRESENTATIVE AND 
ADJUSTERS 

(a) Applicants must meet minimum qualifica- 
tions as stated in Chapter 58, Section 44 615 of 
the General Statutes of North Carolina. 

(b) An apphcant Applicants for a Ucense to sell 
Variable Contracts s'ariablo annuities must follow 
additional procedures as outlined in 1 1 NCAC 6 
A .0406. 

(c) A Limited Representative must be licensed 
with each company for which he will solicit bu- 
siness. No solicitation shall begin by the appli- 
cant until he has received such license. 

(«^ (d] Responsibility of Company for Lorms 
and Fees 

(1) Companies shall have tbe seie r e sponsi 
bility fof ma Icing application fef agents 
aR4 company adjusters !«• be hconsed. 
There shall b» only »fte oflio e with a«- 
thority te malio such requests aft4 t4»t- 
office location must be e» file with tfie fi- 
censing di' . ision. Also , e ach company 

i I ITJDl U V J I CJ III I V 1 1. J JI l-'iTV. 1 1 lUTTT^^J TT TITJ r^r^7 vT^W 

only persons authorised t» make applioa 
fi»ft fof examination a«4 licensing ef 
agents ©f adjusters. 44»e name ef e ach 
authoris e d company ropresentativo must 
be »«• file i» a pennanont file ift tfie divi 

tatives who afe »» file with tbe division 
w4U be rocogniaod ift the processing »f e*- 
amination aft4 license applications, make 
application for Limited Representatives 
and Company L'lrm Adjusters to be li- 
censed. 

(2) 44*e company shall submit te tfie division 

simultaneously a company check ift tlie 
correct amount »f examination fee as 
specified m G.S. 105 22S.7 (mad e payable 
tft Ae North Carolina Department ©f te- 



6^2 



NORTH CAROLIN.A REGISTER 



PROPOSED RULES 



ouranco). Porm A-4 aft4 Form A-Sr 
propjrly coinplotod; a nopcirato A-4- Form 
mu !i t be fiubmittod fof eaefe examination 
t» be tolc e n, e xc e pt fof tbe combination 
lifo accident aft4 hoalth oxamination fof 
which only ewe Form A— 1- i« roquirod. 
Comranies shall have on file with the di- 
vision the address of one Central [licens- 
ing Dtfice to which all correspondence, 
hccnscs, and invoices will be forwarded. 



shall administer the Examination for Life 



Accident and Health; Fire and Casualty 



(3) AH uppropriatL' formo a«4 feen must be Fe- 

ct ' ivL'd by Ae divi - jion at- l e ast 4-© dayo 
prior te- tbe oxpoctod examination dat e . 
Companies shall have on file with the di- 
vision a list of persons authorized to make 
application for the issuance licenses and 
tcnnination of licenses, and to submit 
aeent appointments and termination of 
ayicnt appointments. 

(4) The companies shall submit to the divi- 
sion company checks for the proper 
amount due. 



Automobile Physical Damage; Adjusters 
Hail Adjusters; Hospital Service ; Title 



Accident and Health; Dental Service; and 
Surplus Lines. 

(2) AH- hoonooo ioouod as a result ef passing 

grado e» tbe examination shall be contin 

1 1 r-ti u~ i^r\ A i~V^ nil fc^fifc ^^^^^^^ 1 ir~.j-» j^ i-n i ♦ .-\ rv\ ■-. f ■ j^ 

IIUU J LUIU Ul lUlT \^J ^^^^^^ Ul ^J\ I tiUHifUlLlllL' 

annual ronowal, until canoc'lk'd by Ae 
company according te- procoduroo m 44- 
NCAC 6 .0^047 The Ser\ice shall issue 
pass or fail notices for each examination 
administered, without reference to nu- 
meric scores within two weeks of testing. 

(3) The Service shall notify the division of 
score reports for all examinations admin- 
istered, \\itliin one week of testuig. 

(4) The Sen'ice shall meet the requirements 
of its contract with the commissioner in a 
timelv manner. 



(4) [e| Responsibility of the division Agent: 

(1) L'pon receipt &f Forms A 1, A-^ aft4 e«- 

amination feer t+n* division wtH issue a 
pemiit fof examination ' ■ alid fof W days 
from date »f issue. An applicant who is 
subject to the Fxamination shall submit 
to the Service the Candidate Guide Ap- 
plication along with a company check, 
certified check or mone\' order in the ap- 
propriate amcHint. 

(2) -fo some cases the division w4t issue a 
t e mporary hcenso ' ■ ' ■ 'hioh i* " I 'alid pending 
succei . sful completion ©f the examination 
by the applicant, (^.ee 44 NC.VC ^ .OllQ) 
An agent shall be responsible for \'erifving 
licensure to a company prior to being ap- 
pointed. 

(3) AH- applicants i ft»t eligible fof a temporary ' 

license shall have a license issued upon 
successful completion »f t4»e written ejt- 
amination. A person who, after surrender 
or termination of a license for such period 
of time that he is no longer eligible for 
waiver of the examination, shall meet aU (4) 

legal requirements for pre\iously unli- 
censed persons. 
(e^ (t} Results of Examination for Passing 
Grades Responsibility of the Service: 

(1 j Companies wHI be advised that the exami (-^ 

Hee ha* pass e d the e xamination by receipt 

when a temporary license ha* been issued, 
t4+e company wtH be notified m writing 
that- the applicant has passed, without fe- 
foronco te- numerical grade. The Service 



(^ (g) Results of Exanunation for Failing 
Grades Responsibility of the Division: 

(1) 44*e company aft4 the examinee wtH be 
advised ef the failure fo writing by the di- 
vision. >fo- reference wtH be made te Htt- 
merical grade. Upon receipt of score 
reports from the Service, the division shall 
issue appropriate licenses to qualified ap- 
plicants. 

(2) The company application fof lic e ns e . Form 
A 2, aftd the company ch e ck fof licens e 
fee wiH be returned te- the company. For 
eligible applicants, the Division shall issue 
a Temporary 1 iccnsc that is vahd pending 
successful completion of the Fxamination. 
If an applicant who holds a valid Tempo- 
rary License fails the Examination, the 
division shall notify the company and the 
applicant and shall terminate the "I'empo- 
rary License. 
4-he examinee's copy ef the failure letter 



f^ 



w4H sor i 'o a* the applicant's p e rmit te- re- 
take the examination after the ^ day 
waiting period required by lawr 
44*e appUcant shall present h» failure let- 
ter permit. Form A-^ company check, 
aftd proper identification te- the examin e r 
when talcing the examination a second 
time. 

h% cases V i hero a temporary license ha* 
boon issu e d, the apphcant and company 
w4H be advised m writing t4+at the appli 
eaftt ha* failed awd that- t4^e temporary fo 
censo ha* been cancelled. The company 
shall return the temporary hcenso te- the 
division immediately. 



NORTH CAROLINA REGISTER 



643 



PROPOSED RULES 



(4^ i\pplicuntfj v4*e foii the oxainination a 

jL'cond ti»« mutit roinc . titut e a)4 procc 

(Jur e s fof ojiaminution aft4 licensing. 

f^ (h] An applicant Applicants not meeting 

the roquirt ' m e nt requirements of residency as 

stat e d » Gt^ 58 11 shall obtain a letter of 



Clearance lottL'r »f clearanco from tfe» his state i» 
which ki*+ lic ' onL: ' Od of residency certifying the 
fot^ kinds of insurance for which the applicant 
was Hcensed, that the applicant qualified by 
written examination, that all licenses held in that 
state ha\-e been cancelled and that the agent ap- 
plicant was in good standing in that state at the 
time of the cancellation of licenses. 

Siaiuto!y Authority G.S. 5S-6I5; 58-622. 

.0403 LICF.NSING OF NON-RESIDENT 

.\GENTS: LIMITED REPRESENTATIVE 
.\ND .\D.ILSTERS 

(a) rVn indi' i idual appUcant must meet mini- 
mum qualifications as stated in G.S. 5S II, 58- 
615. except those pertaining to residency, m tbe 
ctata. 

(b) A non roL ^ idont agont must be liconsod hf 
Ae ramo company » h» hom e state *s t4*e ©ae 
fof vrliich h^ i* mulcing application te- represent 
ift Nonh Carolina. Non-Resident applicant 
must submit appropnate forms, along with a 
compan\' check, certified check or mone\' order, 
and a Letter of Certification from the applicant s 
state of residency stating that he is duly licensed 
for the same kind of insurance for which he is 
applying. 

fe4 44*e CO mpans' must submit I-omi A-4- aft4 
company chock fof appropriate r e gistration feer 
Tbe registration fee wiii correspond te Ae exam 
ination fe^ a* specified m G.S. 105 228. 7. 
Checks must be made payable te the North Qst- 
rolina Depcirtment &f Insurance. 

(4i fte company must submit Form A-i aft4 
appropriate hconse fee as specified i» G.S. 105 

fe^ ¥iw company must ses4 a letter from a» 
authorii^ed company representativ e indicatmg 
efte ef fhe following: 

{Vf the fttH nam e aft4 address ©f the general 
&f district agent to whom the applicant's 
North Carolina business vrttt be reported. 



e* 



^ 

f^ 



teiTiton includes 



that- the applicant's 
North Carolina, e* 

that the company's accounting procedures 

afe designed te- designate ay > i "orth Caro 

fea busin e ss as such. 

f^ ¥he company ishaii submit a certificate ©f 

l e tter from the applicant's home stat e insuranc e 

depailment stating that he is licensed with the 



same company (agents only) m that state aH4 

11 lUl IIKJ r3 LI \J\J 1 1 J*iJ\S HI ll-^J I T\j TH\J LHUl w rTTT L I lU ITT^^r^W 

lines ef innuronco as those fof which he is apply 
iftg te be hc e nsed i» North Carolina. 



ot Statutory Authority G.S. 58-61 5(a) (h). 



.0404 LICENSING OF RESIDENT BROKERS 

(aj An appUcant Apphcant must be a duly h- 
ccnsed resident agent Agent in this North Caro- 
lina, state according te GrSr 58 10 bs^ 5S 11.1 
aft4 procedures eotabhohed ift 44 NCiVC 6 .0 102. 

(b) A Broker's broker's license gives the holder 
authority to broker only those lines of insurance 
for which he holds an agent's agents license. 
Brokering must be done through a hcensed and 
appointed resident agent of the company with 
which the business is being placed. A Broker's 
Brokers' licenses does de not cany a signatur e 
confer binding authority; b«t it only gjyes a¥e 
authority to share in commissions with a writing 
T^ent. 

(c) Each apphcant must submit t& the di^rision 
Form A-4 aft4 appropriate feer Checks should 
be mad e payabl e te- the North Carolina Depart 
ment ef Insurance. In addition to all required 
forms, an apphcant must submit a company 
check, certiiled check or money order made pay- 
able to the 2v Q Department of Insurance. 

(d) Each apphcant shall fde with the his apph- 
cation the bond required by statute, ia fa' . or ef 
the State ef North Caro Una fof «se ©f aggrieved 
parties using aft "Insurance Broker a Bond" 
form. ¥he bond shall be fof five thousand dei- 
tefs ($5,000) with aft aggregat e UabiUty ef teft 
thousand ($10,000). ¥he beft4 sha^ be contin 
uous ift fonm. if the bond is canc e lled at aftv- 
time, the broker wih be notifi e d ift writing by the 
division that he has ^ days from the date the 
cancellation was received by- the division te fe- 
place the bond. 

Statutory .Authority G.S. 58-615(f)(h)( 1 ). 

.0405 LICENSING OF NON-RESIDENT 
BROKERS 

(a) AppUcant must prop e rly complete the "Ap 
pUcation f»f Non Resident Brokers License." In 
addition to all required forms, an appUcant must 
submit a compan\' check, certified check or mo- 
neN' order made pa\able to the >v Q Department 
of Insurance. 

(b) 4he fee ift North Carohna fo* non r e sid e nt 
brokers is subject te retaUatopy iaw^ btit shah ftet 
be less that t' . vent> five doUars ($25.00). A check 
mad e payable te the North Carolina Depailment 
el Insurance must be submitt e d with appUcation 
te the division. A Non-Resident Broker's Ucense 



644 



NORTH C.4ROLIN.4 REGISTER 



PROPOSED RULES 



gives the holder authority to broker only those 

kinds of insurance for which he holds a License Statutory Authority G.S. S8-614(e)( I ). 

as an a.iient in his state of residency. 

(c) W at purfonTiLinou bond is roquirod by Ae 
statu m which t4*e applicant i« prowntly liconsod, 
tb« Stat e »f North Carolina requir e s that a p«f- 
fonnanco bond ift the same amount be fi4e4 with 
tbe Coinmio ' jionL'r ef Inf i uranoo. A» "InDuranco 
Non Ri' -i idcnt Rrokor'tj Bond" form must b» 
complutod rtft4 ii ubmitt e d te- the di' i ^ioion. Fach 
applicant shall file with his application the bond 
required b\' statute. 

(d ) Att infonnation, forms, fee aft4 bond (whiiro 
applicabl e ) shall be submitted t» the North Ga- 
rolina [^upartmcnt »f Insurance, lic e nsing divi 
sion, along with a self addressed stamped 
unvulopo. A Non- Resident Broker must submit 
a 1 lome State Certification stating the kinds of 
insiirancc for which he is licensed in his state of 
residency, and whether he is in good standing in 
his state of residency. 

(e) Non rosidt ' iit brokers Non- Resident Broker 
may not solicit directly or indirectly, but thev 
may participate in commission of controlled 
brokered business. »»*■ te- exceed 50 percent. 
Att bu '. m e ss must - be countersigned by a duly re- 
gi ' - . tored afhi licensed North Carolina agent. 
IBrokenng must be done through a licensed and 
appointed Resident Agent of the company with 
which the business is being placed. 

Statutory Authority G.S. 58-6l5(f)(h)(2). 

.0406 LICKNSING OF RESIDENT VARI.ABLE 

CONTRACT LIMITEO REPRESENTATIVE 

(a) The company making application must fifst- 
be qualified to issue Vanable Contracts variabl e 
annuity contracts in the State ef North Carolina 
and the applicant must currently be licensed in 
the State ef North Carolina as a 1 ife. Accident 
and 1 lealth agent life agent and appointed by f»f 
that company. 

(b) The company shall de t4+e following: 
f4^ submit to the Division certification that- Ae 

applicant btt* successfully passed part ^7 
NASD Securities lixamination, ef a satis 
factory alternative examination, which 
shall be awy examination which t» declared 
by the commissioner te be equivalent »«• 
the basis ef content afni administration; 
A list ef acceptable e.xaminations vviH- be 
supplied upon request ef the company; 
of the applicant's secunties registration, 
and 
{¥f follow all other procedures for licensing of 
Resident resident agents aft4 adjusters. 
limited Representatives. [NCID R e g. 



.0407 LICENSING OF NON-RESIDENT 
VARIABLE CONTRACT LIMITED 
REPRESENTATIVE 

(a) Application shall be made in the same 
manner as for non rocidont ag e nts afi4 adjusters 
Non- Resident 1 limited Representative as out- 
Imed m 1 1 NCAC 6 A .0403. 

(b) te addition, the The applicant must cur- 
rently be hcensed in North Carolina as a life 
non resident ag e nt Life, Accident and Health 
Non- Resident Agent and appointed by the same 
company that is making application for the Var- 
iable Contract license, variable annuitioo. 

(c) The company shall submit certification by 
the homo state insuranc e department »f tbe ap- 
phcant ^ state of residency stating that the ap- 
pUcant is currently licensed as a life resident agent 
life, Accident and Health Resident Agent and 
holds a Variable Contract license in that state. 
' . oriablo aimuity agent m that state, aft4 that the 
applicant is licensed with the same company as 
the efte fef which is maldng application ift North 
Carolina. Certification must alse- state that the 
apphcant has passed a required variable annuity 
written examination ef a comparable e.xamina 
ti»ft required i» that stat e . 

(d) A copy ef the applicant's securities rogistra 

f 1 C^n TTH It't ^"*' ^ ■.•'^ 1 V-n -»-A . ♦ * , 1 ,1 1 1 r i* t-» I • r~i j-TT-n ■ ■ A 1 \ I »~ir\ ,\ 

TT^TTT III \I",^ VJ\J BTJniIIl H.'U *T till I T_fTttiW I \ 1 , rT^C HTTTT 

feesr Non resident vanable aiuiuity license must 
be the same tyf>e (local ef general) agent as spe- 
cified eft the life non resident license. A certif- 
ication of the applicant's securities registration 
and proper fees must be submitted at the time 
of application. 

advis e the division what general agent ef resident 
agents wiW report the busin e ss written by the ap- 
phoant. P«4i name aft4 address ef that agent is 
required. 

Statutory Authority G.S. SS-6l4(e)( I ). 

.0408 LICENSING OF MOTOR VEHICLE 
DAMAGE APPRAISERS 

(a) The applicant Applicant must submit the 
appropriate forms along with a company check, 
certified check or money order in the proper 
amount to the division. The apphcant must 
meet all other rele\ant requirements of G.S. 58- 
615 and 58-61 1(e). complete a form A— 1- ^4ft- 
suranc e License Application, Agents, Adjusters" 
aft4 Form A-^ "Insurance License AppUcation, 
Agents, Adjusters" aft4 submit the forms with 
proper fees t» the division. The applicant must 
meet ati other requirements ©f G.S. 58 10.6. 



NORTH CAROLINA REGISTER 



645 



PROPOSED RULES 



Choclcn &f monoy ordorn ohould h« made payable 
to Ae North Carolina Dopartmont ef Insuronoo. 
(b) Ne writton e xamination » roquirod ef motor 
VL ' hiclo damag e approinoro. In addition to all re- 
quired forms and fees, a Non- Resident Motor 
Vehicle Damas^e Appraiser shall submit a Home 
State Certification stating that applicant is duly 
licensed for the same kind of insurance for which 
he is apphina. 

Statutory Authority G.S. 58-6! 1(e); 58-615. 

.0409 I.ICKNSING OF OTHER AGENTS 
AND ADJUSTERS (REPEALED) 

Statutory Authority G.S. 58-9; 58-40; 58-268. 

.0410 TEMPORARY LICENSES 

(a) Applicunto fof tcmporapr licijnr . Q under See- 
t+»fi- (4-^ ef G.S. 58 11.3 ohaU oomplotu forms aft4 
follo' i ' . ' Ae i. ume procLHJure - j outlined m 44 NCAC 
fe .0 103. 44w company v^ii be advised ef tfee Fe- 
&«}*■ ef applic - ant'ii examination. U tbe applicant 
paosof p Ar» wnttLin examination, a p e rman e nt li- 
cense v^H- be issued. U 4h* applicant fotk the 
vvntlL'n e.\aminLition, tbe license must immo 
diately be returned to tbe licensing division &f Ae 
North Carolina Department e4 Insurance. A 
TemporaPi" I .icense is a\'ailable only to persons 
dcscnbed in C}.S. 58-622 (a). 

(b) jXpplicunts f»f temporary ' license under S e c 
hett* fO^ f:H tt«4 f4+ ef G.^" 5S 11.3 ?4«4i follow 
tbe same procedures outlined ift 44 NCi\C 6 
.0 102. fe addition. »» authorized company Fep- 
resentativo shall send a- letter to tbe division re- 
qu e-. ting 4h* temporary lic e ns e aft4 stating Ae 
reason applicant i* applying fof t4*e license, such 
a* death wf disability ef tbe present licensee. 1 he 
conipan\' shall submit to the division the appli- 
cation for lemporan,' [ icense at the same time 
the apiilicant for\\ards the Candidate Guide Ap- 
plication to the Service. 

(c) Successful completion of the Examination 
will cause the Temporary I icense to be changed 
to a permanent license. 

(d) I'nsuccessful completion of the Fxamina- 
tion will cause immediate cancellation of the 

lemporarN' I icense. The company shall return 
the Temporary L icense to the division imme- 
diately. 

(e) .Applicants for temporan' license due to 
hardship will follow the procedures outlined in 
JJ_ NCAC 6 0402. In addition, an authorized 
company official shall send a letter to the division 
requesting a temporary' license and stating the 
reason applicant is applying. 

Statuton Authority G.S. 58-41.3. 



.0411 LIMITED LICENSES (REPEALED) 

Statutory Authority G.S. 58-41.2. 

.0412 APPOINTMENT OF AGENT: 

RESPONSIBILITY OF COMPANY 

Companies shall be responsible for investigating 
an agent pnor to appointing the agent. The 
company shall determine that each agent holds 
the proper license for each kind of authority for 
which such agent will be appointed. A compa- 
ny's investigation of an agent shall give due con- 
sideration to the provisions of G.S. 58-6 15(c) 
concerning character, competence and trustwor- 
thiness. The appointing company shall inquire 
of agents information relevant to the grounds for 
license suspension or revocation set forth in G.S. 
58-618(a). The "Appointment of North Caro- 
lina Agent" form must be received by the divi- 
sion within 30 days of the appointment. 

Statutory Authority G.S. 58-617. 

.0413 LICENSING OF CORPORATION: 
PARTNERSHIPS 

(a) Applicants must meet minunum qualifica- 
tions as stated in G.S. 58-615. 

(b) Applicants shaU submit application forms 
with a company check, certified check or money 
order. 

(c) Corporations making first time application 
domiciled in North Carolina shall provide proof 
of corporate status by submitting a copy of its 
/Articles of Incorporation certified by the North 
Carolina Secretary of State. 

(d) A foreign corporation making first time 
application shall provide proof of corporate sta- 
tus by submitting a copy of its Application for 
Certificate of Authority certified by the North 
Carolina Secretary of State. 

(e) Partnerships making first time application 
shall submit a copy of the filing with the County 
Clerk's office where the Partnership business is 
being conducted. This copy shall be certified by 
the County Clerk or a Notary Public. 

(f) Applicant shaU file with the department a 
list of all companies contracted with the firm 
along with the names and social security numbers 
of the agents representing each company. 

(g) Any addition or deletion of an agent or 
company shall be submitted in writing within 30 
days of any such change in the corporate repre- 
sentation. 

(h) The "Corporation / Partnership .Applica- 
tion" shall bear the signatures of all officers of the 
corporation or partners of the partnership. 



646 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



Statutory Authority G.S. 58-6/5. 

SECTION .0500 - RENEWAL AND 
CANCELLATION OF LICENSED 

.0501 RENEWAL OF AGENT APPOINTMENTS 
AND LICENSES FOR LIMITED 
REPRESENTATIVES: AND COMPANY 
ADJUSTERS 

(a) The company Dhall submit concoUution 
forms te tk« divioion »» ef brfore the kst- date 
spociiieJ by the dii i iL f ion. Companjos w^ be 
givon ctt least :iO days advanc e notice »f the test- 
date the division vnil- process cancoUationo. 
Compaiiios shall ahfB- R e c e iv e a copy ef proper 
renewal and cancellation procedur e s. Annually 
the division will provide to each company a list 
of appointees and licensees. Following in- 
structions accompanying such list, the company 
shall indicate all appointments and licenses which 
arc to be terminated. Hach list shaU be returned 
no later than the date speciiied bv the in- 
structions. Companies wiU be given at least 30 
days advance notice of the last date the division 
will process terminations. 

(bj On the date specified by the division as the 
last date to submit cancoUations, terminations, 
the division shall cease processing ef all cancella 
tions terminations and begin billing bill compa- 
nies for renewals. AW agents wiU- automatically 
be renewed unless the division hat- received a 
"Request fof Cancellation ef Agents and 
Adiuster(s)" fonn ef a "North Carolina Depart 
ment ef hisurance Notice ef Canc e llation" from 
the company. All appointments and hcenses will 
automatically be renewed unless the division has 
recei\'ed a termination request from the Com- 
pany within the specified time. 

(c) bach company Companx' will be sent ari 
invoice from the division statmg the total amount 
of money due. Companies shall remit a check 
made payable to the North Carolina Department 
of Insurance in the amount of the invoice, from 
the licensing dix ision. Any discrepancies claimed 
by companies will be adjusted only after full 
payment is received. 

(d) L pon receipt of the company check, the 
division will mail all agents aftd adjusters' hoeni . oo 
to the company The company will tbe» hav e the 
rosponsibihty fef distribution ef the licenses te 
indi' i' idual agents aft4 adjust e rs, a list of aU ap- 
pointments and licenses renewed. 

(e) Daily licenses issued prior te the r e newal 
date, Appointments recorded and licenses issued 
prior to the renewal date, but after the date spe- 
cified by the division as the last date to process 
termination canc e llations will be considered valid 
until the following year, when they wiH be a«- 



tomatioaUy ronowod unlooo cancoliod by the 
company. 

Statutory Authority G.S. 58-620. 

.0502 RENEWAL OF BROKERS LICENSES 

(a) The division will mail to all Drolcoro, Fe«- 
d e nt a«4 non rooidont. Brokers a "Resident Dro 
kor's Renewal Broker Apphcation" or " Renewal 
Application fo* Non- Resident Broker's License, 
Broker Application," whichever is appropriate. 

(b) Brokers shall complete the form and return 
it to the division by the date specified. 

(c) Brokers shall submit the proper renewal fee 
as stated in G.S. 105 328.7. 58-634. Checks 
An agency check, company check, certified check 
or money order must be made payable to the 
North Carolina Department of Insurance. 

(d) Broker bonds Bonds must be in force at the 
time of renewal, ' ■ ' ■■ hero appUoablo. 

Statutory Authority G.S. 58-6l5(n); 58-634. 

.0503 RENEWAL: SELF-EMPLOYED 
ADJUSTER: MOTOR VEHICLE 
DAMAGE APPRAISER 

The division will mail an appropriate renewal 
form to the self employed adjuster ef motor ve- 
hiolo damag e appraiior Self-Emploved Adjuster 
or Motor Vehicle Damage Appraiser and will 
specily the last date that the division will accept 
these renewals. The renewal form and appro- 
priate renewal fee as specified in G.S. 105 328.7 
58-634 must be submitted to the division e«- ef 
before the last date sp e cifi e d, within the time 
allowed. Afty renewal fonno aftd fees net fe- 
coivod by the specified date wiU result m the 
cancellation ef the liconoo hold. AH chocks An 
adjusting company check, certified check or mo- 
ney order must be made payable to the North 
Carohna Department of Insurance. 

Statutory Authority G.S. 58-6 1 4(n); 58-634. 

.0504 NON-RENEWAL: CANCELLATION OF 
LICENSES ISSUED DIRECTLY 
TO INDIVIDUALS 

Failure to renew a license by the date specified 
by the division will result in automatic cancella- 
tion of the license by the division. This Rule 
applies to all self employed adjusters, resident 
aftd non resident brokers, aftd motor vehicle 
damag e appraiwrs. Self-Fmploved Adjusters, 
Brokers, and Motor Vehicle Damage Appraisers. 

Statutory Authority G.S. 58-6 1 4(n). 

.0505 CANCELLATION OF LICENSES FOR 
LIMITED REPRESENTATIVES AND 



NORTH CAROLINA REGISTER 



647 



PROPOSED RULES 



COMPANY ADJUSTERS 

Any company wishing to cancel the license of 
any of its agents »f adjusturo Limited Represen- 
tatives or yXdjustcrs shall: 

(1) Submit the N.C. Notice of Cancellation 
oanoollution form to the liconoing division. 
'44*^ company 1 B M number muct b« ift- 
cludod Bft A« oancQllation form. 

(2) Send the agent o ef adju ' .it e r s hcensc to the 
division with the a cancellation form et 
Notice of Cancellation. If the license cannot 
be located, the company must furnish the 
division with an affidavit stating the reason 
for the license not being returned. 

(3) For cancellation other than thooo at the 
renewal date, submit cancellation formn no- 
tice of cancellation within 31) days of the 
date on which t+H» 4t*t» the agL'nt's &f 
adju 'i ler ' i 1 irmtcd Represcntati\-e's or 
Adjuster's employment with the company 
was terminated. 

Statulmy Authority G.S. 5S-620. 

.0506 C.\NCELI ATION OF LICENSES 
ISSl ED TO INDIVIDl AES 

(a) An .Agent, Broker, Adjuster or Motor Ve- 
hicle Damage Appraiser desiring to cancel a U- 
cense shall submit a wntten request to the 
di\ision and return the license to the division. 
If the license cannot be located, the licensee must 
furnish a statement explaining the reason for not 
returning the license. 

(b) Cancellation of a license will automatically 
terminate all appointments for the line of au- 
thority co\ered by such license. 

Statutory- Authority G. S. 5S-6l7(e); 5S-6I9. 

.0507 TERMINATION OF AGENT 
APPOINTMENT 

Any company wishing to tenninate an agent's 
appointment shall; 

(1) Submit the Termination of North Carolina 
Agent Appointment form to the division. 

(2) For termination other than at the renewal 
date, submit the termination form within 30 
days of the date on which the agent's con- 
tract with the company was terminated. 

Statutoiy Authority G. S. 58-617 (e). 

SECTION .0600 - DENI.VL OF LICENSE 

.0601 B.\SIS FOR DENIAL OF LICENSE 

44*t^ departm e nt may rofuw to io ' . i ue a licen^ .e 
t+ft t+ftt* t+f » combination &f the following bui i t ' o, 
including. b«t- ftf4 limited tor 



f+^ failure ef th« appUoant te succeosfuUy pass 
a written oxamination; 

f3^ complotion ef application formo by a» ap- 
plioont witk foke ef inoomploto informati eft 
i» a» attempt to mic i load tfe« department »f 
ift a» attempt te conc e al p e rtinent informa 
tieft wrtfe roforonce te qualifications fef t- 

(4) a record ef past- ^- kilationo ef th# insuranoo 
la¥r* »f a record &f unethical conduct v i hilo 
liconr . od with tfek ©f afty other c . tato; 
f4) a court record which, tft the opinion ef the 
department, indicateo that the appUcant is 
untruatworthy; 
(4) ha* ' . ' ■ illfully failed te comply with, ef has 
willfully violated, a»y proper order, f«4© ef 
regulation iooued by the oommiooioner. 
F or purposes of determining that a licensee has 
committed forgery under G.S. 58-61 8(a)( 12) an 
"Apphcation for Insurance" shall be considered 
to be the application form, under\vnting form 
and any policy servicing or claim form that aJ- 
fects any funds, rights or privileges of the pohc- 
vowner or insured. 

Statutory Authority G.S. 58-618. 

.0602 COURT RECORDS AND AFFIDAVITS 
REQUIRED 

An individual who has been convicted of a 
crime, crimoo, other than traffic violations, shall 
submit to the licensing division the following in- 
formation with applications for license and ex- 
amination: 

(1) a copy of the entire court record; 

(2) a copy of unconditional release and un- 
conditional discharge from the Board of 
Paroles, where applicable, on the forms 
provided by the North Carolina Department 
of Correction; 

(3) notarLied offidavitii from at least tw©- indi 
viduals who hav e known the applicant f&f 

charact e r »f the applicant; if the apphcant 
or licensee is currently emploved or expects 
to be emploved by an insurer, agency, com- 
pany or firm in the business of insurance, 
the applicant or licensee shall submit a letter 
from such employer or potential employer 
■Stating that the applicant or licensee has 
disclosed to the employer infonnation con- 
cerning the con\'iction; 

(4) a notarized alTidavit from the applicant 
concerning the matter; conviction; 

(5) when applicable, a statement from the ap- 
plicant's probation ofricer(s); 



64<S 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



(6) any additional oupportivo information 
which the doportmont division deems neces- 
sary and proper. 

Statutory' Authority G.S. 58-618. 

.0603 EVALUATION OF RECORDS AND 
AFFIDAVITS 

In its e\aluation of court records and affidavits, 
the dupurtmont di\ision shall consider all infor- 
mation and as many facts as are presented to it, 
including, but not limited to: 

( 1 ) time elapsed since last offense or conviction; 

(2) seriousness of the offense or alleged offense; 

(3) extenuating circumstances, particularly in 
the case of juvenile offenses; 

(4) statements of character witnesses, including 
the notarized affidavits which are submitted 
by previous employers. 

Statutory- Authority G.S. 58-618. 

.0604 PERSONAL INTERVIEWS 

Personal interviews may be required for pur- 
poses of clarification of information or for pres- 
entation of additional information. Such 
inter\'iews may be initiated by any efie of the 
parties involved: Aat- i* the department, tbe 
cponsoring company, or the applicant, ■'^ll re- 
quests for personal intenicws shall be made in 
writing, shall include a brief explanation of the 
reason for the interview, and shall specify what 
infonnation will be required if any. 

Statutory Authority G.S. 58-618. 

.0605 NOTIFICATION OF DENIAL OF 
LICENSE (REPEALED) 

Statutory Authority G.S. 58-9. 

SECTION .0700 - PRE-LICENSING EDUCATION 

.0701 GENER.4L REQUIREMENTS 

(a) This Section applies to individuals attempt- 
ing to obtain a license to solicit Life, Accident 
and Health and or Fire and Casualty insurance 
in North Carolina except as specifically exempted 
by 11 NCAC 6A .0701 (b) through (e). 
(b) The following individuals applying for a 
Life, Accident and Health and/or Fire and Cas- 
ualty license shall be exempt from the provisions 
of this Section: 

(1) An individual licensed in North Carolina 
for Life, Accident and Health and/or Fire 
and Casualty insurance within 24 months 
preceding the date of application for a new 
license in that kind of insurance: or 



(2) An individual licensed in another state for 
Life, Accident and Health and/or Fire and 
Casualty insurance within 24 months pre- 
ceding the date of application for a new 
license in that kind of insurance, upon 
furnishing a Letter of Clearance certifying 
same and that such license was granted 
upon passing a written examination given 
by an insurance department of a state. A 
Letter of Clearance is valid for six months 
from its date of issuance, 
(c) The following individuals applying for a 

Life, Accident and Ilealth license shall be exempt 

from the provisions of this Section: 

(1) Chartered Financial Consultant (ChFC); 
or 

(2) Chartered Life Underwriter (CLU); or 

(3) Fellow of Life Management Institute 
(FLMI);or 

(4) Life Underwriter Training Council Fellow 
(LUTCF). 

fd) Individuals applying for a Fire and Casualty 
hcense who are Chartered Property and Casualty 
Underwriters (CPCU) shall be exempt from the 
provisions of this Section. 

(e) The following individuals applying for a 
Life, Accident and Health and/or Fire and Cas- 
ualty license shaU be exempt from the provisions 
of this Section but are required to take the Ex- 
amination: 

(1) Life, Accident and Health: 

(A) Certified Employee Benefits Specialist 
(CEBS); or 

(B) Fraternal Insurance Counselor (FIC); 
or 

(C) Life Underwriter Training Council 
Graduate (LUTC Graduate); or 

(D) Certilied Financial Planner (CEP); or 

(E) Holder of degree in Insurance (Associ- 
ate or Bachelors). 

(2) Fire and Casualty: 

(A) Accredited Advisor in Insurance (.AAI); 
or 

(B) Associate in Claims (AIC); or 

(C) Associate in Insurance Accounting and 
Finance (AIAF); or 

(D) Associate in Premium Auditing (APA); 
or 

(E) Associate in Risk Management (ARM); 
or 

(F) Associate in Underwriting (AU); or 

(G) Certified Insurance Counselor (CIC); 
or 

(H) Holder of Certificate in General Insur- 
ance (INS); or 

(I) 1 lolder of degree in Insurance (Associate 
or Bachelors). 



NORTH CAROLINA REGISTER 



649 



PROPOSED RULES 



If an applicant exempted from Prclicensing Edu- 
cation under the provisions of Rule .0701 (e) fails 
the Examination, the applicant must successfully 
meet North Carolina's mandatory Prelicensing 
Education requirement prior to retaking the Ex- 
amination. 

(f) In this Section, unless otherwise noted the 
following definitions will apply: 

(1) 'VXssistant Instructor" shall mean an ap- 
proved instructor in a classroom school 
who is responsible for the presentation of 
lesson plans to assure that the Outline is 
taught to that school's students. The As- 
sistant Instructor shall be supervised by 
the school's appropriate I.ead Instructor 
and Progr;im Director. 

(2) "(Classroom School" shall mean an entity 
that prosides Prelicensing Education 
sponsored by a company, agency, associ- 
ation or educational institution through 
instruction by either a Lead or Assistant 
Instructor utilizing a teaching curriculum 
based on the OutUne. 

(3) "Correspondence Course" shall mean 
home, self, individual, or correspondence 
study utilising programmed text in- 
structions. 

(4) "(Correspondence School" shall mean an 
entity that provides Prelicensing Educa- 
tion sponsored by a company, agency, 
association or educational institution 
through completion of a correspondence 
course which has been approved by the 
commissioner, with students individually 
supervised by an approved Proctor. 

(5) "Lead Instructor" shall mean an approved 
instructor in a classroom school who is 
responsible for preparation and presenta- 
tion of lesson plans to assure that the 
Outline is taught to that school's students 
and who prepares a final course examina- 
tion. The Lead Instructor shall direct and 
supervise teaching by an Assistant In- 
structor. 

(6) "Outline" shall mean the North Carolina 
Instructors Life, Accident and Health 
and/or Fire and Casualty Outline pre- 
pared and published by the department. 

(7) "Proctor" shall mean an individual ap- 
proved by the commissioner to assist and 
supervise students in the completion of an 
approved Correspondence Course. 

(8) "Program Director" shall mean the indi- 
vidual associated uith an approved class- 
room or correspondence school who is 
responsible for the administration of that 
school according to 1 1 NCAC 6A .0702 
(k). 



Statutory Authority G.S. 58-615(d); 58-616. 

.0702 PRELICENSING EDUCATION SCHOOLS 

(a) This Rule applies to all classroom and cor- 
respondence schools offering a Prelicensing 
course prescribed by General Statute 58-615. 
All schools desiring to conduct a Prelicensing 
course shall be approved by the commissioner 
prior to commencement of the courses. 

(b) A school seeking approval to conduct a 
Prelicensing course shall make written applica- 
tion to the Commissioner upon a form pre- 
scribed by the commissioner. 

(c) /Vfter due investigation and consideration, 
approval shall be granted to the school when it 
is shown to the satisfaction of the commissioner 
that: 

(1) the school has submitted all information 
required by the commissioner; 

(2) the course to be conducted complies with 
Rule .0704 of this Section; 

(3) the Instructor or Proctor for the course 
has been approved by the commissioner 
in accordance with Rule .0705 or .0706 
of this Section; and 

(4) the Program Director has been approved 
by the commissioner in accordance with 
Rule .0703 of this Section. 

(d) Lhe foUowmg guidelmes shall apply to the 
approval of classroom and correspondence 
schools: 

(1) Approval extends only to the course and 
location reported in the application for 
approval. 

(2) Approval shall terminate on June 30 next 
following the date of issuance. 

(3) A school must renew annually its approval 
to conduct Prelicensing courses by sub- 
mitting an application for approval not 
later than May 31 of each year. 

(4) Any school that does not conduct at least 
one Prelicensing course during the 24 
months preceding application for renewal 
shall be deemed ineligible for approval. 

(e) The commissioner shall deny, withdraw or 
suspend approval of any school upon fmding 
that: 

(1) the school has refused or failed to comply 
with any of the provisions of Rules .0702, 
.0703, .0704, .0705, or .0706 of this Sec- 
tion; or 

(2) any school official or instructor has ob- 
tained or used, or attempted to obtain or 
use, in any manner or form. Examination 
questions; or 

(3) the school's students have a licensing ex- 
amination performance record that is de- 



650 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



tcrmincd by the commissioner to be 
substantially below the performance re- 
cord of all first-time examination candi- 
dates. 

(f) In all proceedings to withdraw or deny ap- 
proval of a school, the provisions of Chapter 
150B of the General Statutes shall be applicable. 

(g) When a school's approval is discontinued, 
the procedure for reinstatement shall be to apply 
as a new school, with a statement of the reasons 
that the school is now eligible for reconsider- 
ation. The commissioner may require an inves- 
tigation before new approval is granted. 

(h) The following guidelines shall apply for 
changes during any approved year: 

(1) A school shall obtain advance approval 
from the commissioner for any change of 
course location or change of Instructors 
or Proctors. Requests for approval of 
such changes shall be in writing. 

(2) An approved school that intends to ter- 
minate its Prehcensing program shall no- 
tify the commissioner in writing. 

(3) A school shall notify the commissioner in 
writing of a change of textbook. 

(4) A school shall notify the commissioner in 
writing at the time an Instructor or Proc- 
tor resigns or ceases to be associated with 
the school. 

(i) ^Vn approved school may utilize, for adver- 
tising or promotional purposes. Examination 
performance data provided to the school by the 
commissioner, provided that any data disclosed 
by the school shall be accurate, shall be presented 
in a manner that is not misleading, and shall: 

(1) be limited to the annual li.xamination 
performance data for the particular school 
and for all Examination candidates in the 
state; 

(2) include the type of E'xamination, the time 
period covered, the number of first-time 
candidates examined, and either the num- 
ber or percentage of first-time candidates 
passing the Examination; and 

(3) be reviewed and approved by the com- 
missioner prior to publication. 

(j) A classroom school's facilities and equip- 
ment shall have been found by appropriate local 
building, heating and fire inspectors to be in 
compliance with all applicable local, state and 
federal laws and regulations regarding safety, sa- 
nitation, and access by handicapped persons. 

(k) The school shall designate one person as 
the Program Director. The Program Director 
shall be responsible for administrative matters 
such as recruiting, evaluating and certifying the 
qualifications of Instructors and/or Proctors, 
program development, scheduling of classes, ad- 



vertising, maintaining facilities and equipment, 
recordkeeping and general supervision of the 
Prelicensing program. 

(k) The school shall designate one person as 
the Program Director. The Program Director 
shall be responsible for administrative matters 
such as recruiting, evaluating and program de- 
velopment, scheduling of classes, advertising, 
maintaining of the Prelicensing program. 

(1) A school shall publish and provide to all 
students prior to enrollment a bulletin or similar 
official publication of that school that contains 
the following information: 

(1) name of school and publication date; 

(2) name of sponsor; 

(3) all associated costs; 

(4) detailed outline or description of all Preli- 
censing courses offered. 

(m) A school shall file with the commissioner 
information giving exact dates, times, and lo- 
cations for each scheduled Prehcensing course. 
This information may be submitted either at the 
' 'ginning of each quarter/semester, or no later 
than one week prior to the first class meeting of 
each Prelicensing course. 

(n) Classroom schools shall retain the follow- 
ing material on fde for a minimum of three years: 

(1) class schedules; 

(2) advertisements; 

(3) bulletins, catalogues, and other official 
publications; 

(4) grade reports; 

(5) attendance records; 

(6) master copy of each final course exam- 
ination, indicating the answer key, the 
school name, course location, course dates 
and name of instructor; and 

(7) hst of student names and Social Security 
numbers for each course, and the name 
of the Instructor. 

All fdes shall be made available to the commis- 
sioner upon request. 

(o) Correspondence schools shall retain the 
following material on fde for a minimum of three 
years: 

(1) advertisements, 

(2) bulletins, catalogues and other official pu- 
blications, 

(3) grade reports, and 

(4) a list of student names and Social Security 
numbers for each course and the name of 
the Proctor. 

,^11 files shall be made available to the commis- 
sioner upon request. 

(p) In the event of illness, injury or death of 
an Instructor or Proctor, the Program Director 
may utilize a non-approved Instructor or Proctor 
to complete a course. The school shall thereafter 



NORTH CAROLINA REGISTER 



651 



PROPOSED RULES 



suspend operation of its Prelicensing courses un- 
til an approved Instructor or Proctor is available. 

Statutory Authority G.S. 58-6 1 5(d). 

.0703 PROGRAM DIRECTORS 

(a) All Program Directors shall be approved 
by the commissioner in accordance with the 
provisions of this Section. 

(b) A person desiring approval as a Program 
Director shall make written application to the 
commissioner upon a form prescribed by the 
commissioner. 

(c) Applications must be endorsed by the 
President Chief Operating Officer of the spon- 
soring educational institution, company, agency 
or association. If the employing school is not 
currently approved by the commissioner, an ap- 
plication for school approval should be submit- 
ted along with the application for Program 
Director approval. 

(d) The commissioner shall approve an apph- 
cant as a Program Director upon finding that the 
applicant is recommended by the President Chief 
Operating Officer of the sponsoring educational 
institution, company, agency or association has 
submitted all infonnation required by the com- 
missioner, possesses good character and reputa- 
tion, and possesses the qualifications described m 
this Paragraph: 

( 1 ) 1 lolds a baccalaureate or higher degree and 
has at least two years experience as an in- 
structor of insurance or as an educational 
administrator; or 

(2) I lolds a baccalaureate or higher degree and 
has at least six years of experience in the 
insurance industry with a minimum of 
two years experience in insurance man- 
agement; or 

(3) Possesses qualifications which are found 
by the commissioner to be substantially 
equivalent to those described. 

(e) Program Director appro\aI shall be valid for 
an indefinite period, subject to future changes in 
laws or regulations regarding approval of Pro- 
gram Directors. 

(f) The commissioner shall deny, revoke, or 
suspend the approval of any Program Director 
upon finding that: 

( 1 ) The Program Director fails to meet the 
criteria for approval provided by these 
Regulations; or 

(2) The Program Director has failed to com- 
plv with any provisions of 1 1 NCAC 6A 
.0700; or 

(3) The Program Director's employment has 
been terminated by any sponsoring edu- 
cational institution/company; or 



(4) The Program Director provided false in- 
formation to the commissioner when 
making application for approval; or 

(5) The Program Director has at any time had 
an insurance license denied, suspended or 
revoked by this or any other insurance 
department, or has ever been required to 
return a license while under investigation; 
or 

(6) ITie Program Director has obtained or 
used, or attempted to obtain or use, in any 
manner or form. North Carolina Insur- 
ance licensing examination questions; or 

(7) The Program Director has failed to utilize 
an acceptable level of performance in di- 
recting the Insurance Prelicensing Pro- 
gram. 

(g) In all proceedings to deny, revoke, or sus- 
pend approval, the provisions of Chapter 150B 
of the General Statutes shall be apphcable. 

(h) When a Program Director's approval is 
discontinued, the procedure for reinstatement 
shall be to apply as a new Program Director, 
with a statement of the reasons that he is now 
eligible for reconsideration. The commissioner 
may require an investigation before new approval 
is granted. 

(i) An approved Program Director shall inform 
the Commissioner of any change in program af- 
filiation by fihng an application for Program Di- 
rector approval prior to directing a new program. 

(j) Full-time faculty of fuUy accredited senior 
level colleges and universities who regularly teach 
Risk and Insurance courses shall be deemed to 
meet the eligibiUty requirements of this Section. 

Statutory Authority G.S. 58-6l5(d). 

.0704 COURSES 

(a) This Rule establishes minimum standards 
for Life, Accident and Health and/or Pire and 
Casualty Prelicensing courses prescribed by 
General Statute 58-615. 

(b) Insurance Prehcensing programs shall con- 
sist of one or both of the following courses: 

(1) Life, Accident and Health Insurance; 

(2) Fire and Casualty Insurance; 

(c) The maximum length of an approved Pre- 
hcensing Education course shall be at the dis- 
cretion of the school. In no event shall a school 
offer a course of less than 40 hours. 

(d) The following requirements are course 
standards: 

(1) All courses shall consist of mstruction in 
the subject areas covered in the Outline. 

(2) Courses may also include co\'erage of re- 
lated subject areas not prescribed by the 
commissioner; however, such courses 



652 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



must provide additional class time, above 
the minimum requirement state in Rule 
.0704 (c) of this Section for the coverage 
of such subject areas. 

(3) Prelicensing courses are intended for in- 
structional purposes only and not for 
promoting the interests of or recruiting 
employees for any particular insurance 
agency or company. 

(4) Schools shall establish and enforce aca- 
demic standards for course completion 
that reasonably assure that students re- 
ceiving a passing grade possess adequate 
knowledge and understanding of the sub- 
ject areas prescribed for the course. In 
any course for which college credit is 
awarded, the passing grade for such course 
shall be the same as the grade that is con- 
sidered passing under the school's uniform 
grading system. 

(5) Schools shall conduct a final comprehen- 
sive course examination that covers all 
subject areas prescribed by the commis- 
sioner for each course. The time for this 
examination shaU be in addition to the 
minimum 40 hours of instruction re- 
quired. Schools may allow a student to 
make up a missed examination or to re- 
take a failed examination in accordance 
with policies adopted by the school. No 
fmal examination may be scheduled until 
the fifth day after the commencement of 
the course. 

(6) Students shall attend a minimum of 40 
hours of instruction. Break time may not 
count toward the 40 hour instructional 
requirement. If a course is scheduled for 
50 or more instructional hours, a student 
shall attend at least 80 percent of the total 
hours offered by the course. 

(e) The following requirements shall be met for 
scheduling purposes: 

(1) Class meetings or correspondence courses 
shall be limited to a maximum of eight 
hours of instruction in any given day. 

(2) Classroom courses shall have fixed begin- 
ning and ending dates and may not be 
conducted on an open-entry/open-exit 
basis. 

(3) Correspondence courses shall not have 
fixed beginning and ending dates and shall 
be conducted on an open-entry basis. 

(f) The following shall apply to the use of text 
books; 

(1) Choice of classroom course text shall be 
at the discretion of each school. 



(2) Text books used in correspondence 
courses shall be approved by the com- 
missioner before use. 

(g) All Prehcensing classroom school courses 
shall be taught by Instructors who have been 
approved by the commissioner. A Lead In- 
structor must be designated for each course lo- 
cation. 

(h) AH Prelicensing correspondence courses 
shall be monitored by Proctors who have been 
approved by the commissioner. A Proctor shall 
be designated for each correspondence course 
student. 

(i) The following certification of course com- 
pletion procedures shaJl apply: 

(1) Schools shall furnish each student who 
successfuUy completes a Prelicensing 
course an official certificate on a form 
prescribed by the commissioner. A cer- 
tificate shall not be issued to a student 
prior to completion of all course require- 
ments and the passing of the course's 
comprehensive fmal examination. 

(2) A Certificate of Prelicensing Course 
Completion shall be issued for each 
course successfuUy completed by a stu- 
dent. A certificate presented at the Ex- 
amination site that indicates completion 
of more than one course shaU be held in- 
valid. 

(3) A Certificate of Prelicensing Course 
Completion shall be valid for access to the 
Examination for 12 months. If an appU- 
cant for a hcense does not successfuUy 
pass the Examination within 12 months, 
he shall again complete a Prehcensing 
Education course to be ehgible for the 
Examination. 

Statutory Authority G.S. 58-615(d). 

.0705 LEAD AND ASSISTANT INSTRUCTORS 

(a) All Lead and Assistant Instructors shall be 
approved by the commissioner in accordance 
with the provisions of this Rule. 

(b) A person desiring approval to teach Preli- 
censing courses shaU make written application to 
the commissioner upon a form prescribed by the 
commissioner. 

(c) Applications must be endorsed by the Pro- 
gram Director of the employing school. If the 
employing school is not currently approved by 
the commissioner, an application for school ap- 
proval should submitted along with the apphca- 
tion for Lead or Assistant Instructor approval. 

(d) The commissioner shaU approve an appli- 
cant as a Lead Instructor upon fmding that the 
appUcant is recommended by an approved 



NORTH CAROLINA REGISTER 



653 



PROPOSED RULES 



school, has submitted all information required 
by the commissioner, possesses good character 
and reputation, and possesses the appropriate 
qualifications described in this Paragraph: 

(1) life, Accident and Health: 

(A) Chartered Life UndePA'nter (CLU); or 

(B) Chartered Financial Consultant 
(ChFC); or 

(C) I-ellow Life Management Institute 
(l-LMI): or 

(D) Life L'nderwriter Training Council 
Fellow (LLTCF);or 

(E) Attorney (LLB or JD); or 

(F) Four years experience as a fuU-time 
employee or representative in the Life, 
Accident and Health industry and a des- 
ignation as: 

(i) Certified Itmplovee Benefits Specialist 
(C1::BS); or 

(li) Life Underwriter Training Council 
Graduate (lUTC); or 

(iii) Fraternal Insurance Counselor 

(FIC); or 

(i\) Certified Financial Planner (CFP); 
or 

(v) I [older of degree in Insurance (Asso- 
ciate or Bachelors): or 

(G) Three years experience teaching Life, 
Accident and IIe;dth Pre licensing courses; 
or 

(II) S:',en years experience as a full-time 
employee or representative in the Life, 
Accident and Health industry; or 

(I) A combination of training, experience 
and qualifications that are substantially 
equivalent to those listed among Rule 
.0705 (d)( I) (A| through (H) to satisfy the 
commissioner that the applicant is quali- 
fied. 

(2) Fire and Casualty: 

(A) Chartered Property and Casualty L'n- 
derwriter (CPCU); or 

(B) Attorney (LLB or JD); or 

(C) Four years experience as a full-time 
employee or representative in the Fire and 
Casualty industry and a designation as: 
(i) Associate in L'nderwriting (AC); or 
(ii) Program in General Insurance (INS); 

or 
(iii) Accredited Advisor in Insurance 

(.A.^1); or 
(iv) Associate in Claims (AIC); or 
(v) Associate in Risk Management 

(ARM): or 
(vi) Certified Insurance Counselor (CIC); 

or 
(vii) Associate in Premium Auditing 

(APA); or 



(viii) Associate in Insurance Accounting 
and Finance (AIAF); or 

(ix) Holder of degree in Insurance (As- 
sociate or Bachelors); or 

(D) Three years experience teaching Fire 
and Casualty Prelicensing courses; or 

(E) Seven years experience as a fuU-time 
employee or representative in the Fire and 
Casualt) industry; or 

(F) A combination of training, experience 
and qualifications that are substantially 
equivalent to those Usted among Rule 
.0705 (d)(2)(A) through (E) to satisfy the 
commissioner that the applicant is quali- 
fied. 

(e) The commissioner shall approve an appli- 
cant as an Assistant Instructor upon finding that 
the applicant is recommended by an approved 
school, has submitted all infonnation required 
by the commissioner possesses good character 
and reputation, and possesses the appropriate 
qualifications described in this Paragraph: 

(1) Life, Accident and Health Insurance: 
Three years experience in the Fife, Acci- 
dent and Health industry. 

(2) Fire and Casualty Insurance: Three years 
experience in the Fire and Casualty In- 
surance industry. 

(3) Possesses qualifications that arc found by 
the commissioner to be substantially 
equivalent to those described in ( 1 ) and 
(2) of this Paragraph. 

(f) An appUcant for I ead and Assistant In- 
structor shall be appro\cd for each course tauglit 
in the Prelicensing curriculum. 

(g) Approval of an Instructor for a school shall 
continue until cancellation by that school's Pro- 
gram Director, resignation by the Instructor, re- 
vocation or suspension by the commissioner, or 
disapproval or termination of that school. 

(h) The commissioner shall deny, revoke, or 
suspend the approval of an Instructor upon 
finding that: 

( 1) The Instructor fails to meet the criteria for 
approval provided by these regulations; 
or 

(2) Fhe Instructor has failed to comply with 
the commissioner's regulations regarding 
Prelicensing courses or schools; or 

(3) The Instructor's employment has been 
tcnninated by any school approved by the 
commissioner on the grounds of incom- 
petence or failure to comply with institu- 
tional policies and procedures; or 

(4) Fhe Instructor provided false infonnation 
to the commissioner on any form or ap- 
plication; or 



654 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



(5) The Instructor has at any time had an in- 
surance license denied, suspended or re- 
voked by this or any other insurance 
department, or has ever been required to 
return a license while under investigation; 
or 

(6) The Instructor has obtained or used, or 
attempted to obtain or use, in any manner 
or form. Examination questions; or 

(7) The Instructor has failed to employ ac- 
ceptable instructional principles and 
methods. 

(i) In all proceedings to deny, revoke, or sus- 
pend approval of a Lead or Assistant Instructor, 
the provisions of Chapter 150B of the General 
Statutes shall be apphcable. 

(j) When an Instructor's approval is discontin- 
ued, the procedure for reinstatement shall be to 
apply as a new Instructor, with a statement of 
reasons that he is now eligible for reconsider- 
ation. 1 he commissioner may require an inves- 
tigation before new approval is granted. 

(k) /Vn approved Instructor shall inform the 
commissioner of any change in school affiliation 
by filing an apphcation for Instructor approval 
prior to instructmg in the new school. 

Statutory' Authority G.S. 5S-6l5(d). 

.0706 I'ROCTORS 

(a) All Proctors shall be approved by the 
commissioner in accordance with the provisions 
of this Rule. 

(b) A person desiring to be approved as a 
Proctor shall make written apphcation upon a 
form prcscnbcd by the commissioner. 

(c) Applications must be endorsed by the Pro- 
gram Director of the employing correspondence 
school. If the school is not currently approved 
by the commissioner, the application for school 
appro\al should be submitted along with the ap- 
phcation for Proctor approval. 

(d) The commissioner shall approve an apph- 
cant to monitor correspondence courses as a 
Proctor upon fmding that the appHcant is re- 
commended by an approved school, has submit- 
ted all information required by the commissioner, 
possesses good character and reputation, has 
provided evidence of successful completion of 
each correspondence course for which he is to 
be approved as Proctor, and possesses the ap- 
propriate qualifications described in this Para- 
graph for each course for which approval is 
sought: 

(1) Has three years experience inthe Life, Ac- 
cident and health insurance industry to 
proctor Life, Accident and Health Insur- 
ance courses; or 



(2) Has three years experience in the Fire and 
Casualty insurance industry to proctor 
Fire and Casualty Insurance courses. 

(3) Possesses qualifications that are found by 
the commissioner to be substantially 
equivalent to those described in (1) and 
(2) of this Paragraph. 

(e) An appUcant shall be approved for each 
course proctored in the PreUcensing curriculum. 

(0 Approval of a Proctor for a school contin- 
ues until cancellation by that school's Program 
Director, resignation by the Proctor, revocation 
or suspension by the commissioner, or disap- 
proval or termination of the school. 

(g) A Proctor's duties are prescribed by the 
commissioner and a description may be obtained 
by writing to the North Carolina Department of 
Insurance, Agent Ser\'ices Division, PreUcensing 
Education Section, Post Office Box 26267, Ra- 
leigh, North Carolina 27611. 

(h) The commissioner shall deny, revoke or 
suspend the approval of a Proctor upon fmding 
that: 

(1) The Proctor fails to meet the criteria for 
approval provided by these regulations; 
or 

(2) The Proctor has failed to comply with the 
commissioner's regulations regarding cor- 
respondence courses or schools; or 

(3) The Proctor's employment has been ter- 
minated by the school; or 

(4) The Proctor provided false information to 
the commissioner on any form or apph- 
cation; or 

(5) The Proctor has at any time had an in- 
surance hcense denied, suspended or re- 
voked by this or any other insurance 
department, or has ever been required to 
return a hcense while under investigation; 
or 

(6) The Proctor has obtained or used, or at- 
tempted to obtain or use, in any manner 
or form, Examination questions; or 

(7) The Proctor has failed to utilize an ac- 
ceptable level of performance in oversee- 
ing a Prehcensing course. 

(i) In all proceedings to deny, revoke, or sus- 
pend approval of a Proctor, the provisions of 
Chapter 150B of the General Statutes shall be 
applicable. 

(i) When a Proctor's approval is discontinued, 
the procedure for reinstatement shall be to apply 
as a new Proctor, with a statement of reasons 
that he is now ehgible for reconsideration. The 
commissioner may require an investigation be- 
fore new approval is granted. 

(k) An approved Proctor shall inform the 
commissioner of any change in school affihation 



NORTH CAROLINA REGISTER 



655 



PROPOSED RULES 



by filing an application for Proctor approval 
prior to proctonng in the new school. 

Statutory Authority G.S. 58-6l5(d). 



Statutory Authority G.S. l43-2l5.3(a)( I ); 
143-213(18); 143-212(6); 143-214.2. 

■k**-k**-k****-k*-k-t:*-k* 



riTLE 15 - DEPARTMENT OE NATURAL 

RESOURCES AND COMMUNITY 

DEVELOPMENT 



J\ otice is hereby given in accordance with G.S. 
1 508- 1 2 that the A'. C. Environmental Manage- 
ment Commission intends lo amend rule(s) cited 
as 15 SCAC 2J .0002. 

I he proposed effective date of this action is 
.March I. 1989. 

1 he public hearing will be conducted at 10:00 
a.m. on November 1, 1989 at Ground Floor 
Hearing Room, .4rchdale Bldg., 512 A'. Salisbury 
Street. Raleigh. .Xorth Carolina. 



Co 



ommcnt Procedures: Any person interested in 
this matter is imited to attend. Comments, 
statements, data, and other information may be 
.submitted in writing prior to, during, or within 
thirty days after the hearing or may be presented 
orally at the hearing. Oral statements may be 
limited at the discretion of the hearing officer. 
For more information and copies of the proposed 
nde. please contact Mr. Paul Wilms, Director, 
Dhision of Emironmental Management, P. O. 
Box 27687, Raleigh, NC 27611, (919) 733-7015. 

CHAPTER 2 - ENVIRONMENTAL 
MANAGEMENT 

SL'BCMAPTER 2J - CIVIL PENALTIES 

.0002 DEFINITIONS 

(5) "Waste", "wastes", "other v\astes'' shall 
include, but shall not be limited to. sawdust, 
sha\'inL's. lime, offil. oil, tar chemicals, petroleum 
products, medical wastes, refuse, litter, bottle 



1\ otice is hereby given in accordance with G.S. 
I50B-I2 that the Wildlife Resources Commission 
intends to amend rule(s) cited as 15 NCAC I OF 

.0307. 



T". 



I he proposed effective date of this action is Fe- 
bruary I. 1989. 

1 he public hearing will be conducted at 10:00 
a.m. on November 14, 1988 at 386 Archdale 
Bldg., 512 N. Salisbury Street, Raleigh NC 
2^611. 

V, omment Procedures: Interested persons may 
present their views either orally or in writing at the 
hearing. In addition, the record of hearing will 
be open for receipt of written comments from No- 
vember J, 1988 to November 29. 1988. 

CHAPTER 10 - WILDLIFE RESOLRCES AND 
W.MER SAFETY 

SLBCH AFTER I OF - MOTOR BOATS AND 
W .VI ER SAFEl"k 

SECTION .0300 - LOCAL WATER SAFETY 
REGULATIONS 

.0307 CATAWBA: IREDELL: LINCOLN 
AND MECKLENBURG COUNTIES 

(a) Regulated Area. This rule applies to Lake 
Norman which is located in the counties above 
named. 

(b) Speed Limit Near Shore Facilities. No 
person shall operate a vessel at greater than no- 
wake speed within 50 yards of any marked boat 
launching area, bridge, dock, pier, manna, boat 
storage structure, or boat ser\ice area on the wa- 
ters of Lake Norman. 



cans, paper, rubbish, garbage . debns, plastic ma- 
terials and all other substances; and 

(62 "Into waters of the state." "to the waters Statutory Authority G.S. 75A-3; 75A-I5. 
of the state", and "to the open waters of the At- 
lantic Ocean o\'er which the state has 
junsdiction" shall include the act_ of discharging 
or placing materials or substances into or onto 
water adjacent to waters of the state in such 
pro\nnitv that the materials or substances are 
likely to, and subsequently do, enter the waters 
of the state. 



TITLE 18 - DEPART.MENT OF 
SECRETARY OF STATE 



No 



otice is hereby given in accordance with G.S. 
1 50B-I2 that the Securities Division - Department 
of Secretary of State intends to adopt rule(s) 
cited as 18 NCAC 6 .1701 - .1714. .fSOI - .18//. 



656 



NORTH CAROLINA REGISTER 



I 



CORRECTION 



CORRECTION TO NOTICE AS PUBLISHED IN THE NORTH CAROLINA REGISTER AT 
3:14 NCR 656 SHOULD READ: 



TITLE 15 - DEPARTMENT OF NATURAL RESOURCES AND COMMUNITY 

DEVELOPMENT 

Piotice is hereby given in accordance with G.S. I SOB- 1 2 that the N. C. Environmental Management 
Commission intends to amend nde(s) cited as 15 NCAC 2J .0002. 



T, 



he proposed effecti\'e date of this action is March 1 , 1989. 

1 he public hearing will be conducted at 10:00 a.m. on November 21 , 1988 at Ground Floor Hearing 
Room, Archdale Bldg., 512 N . Salisbury Street, Raleigh, North Carolina. 



Co 



comment Procedures: Any person interested in this matter is invited to attend. Comments, statements, 
data, and other information may be submitted in writing prior to, during, or within ten days after the 
hearing or may be presented orally at the hearing. Oral statements may be limited at the discretion of 
the hearing officer. For more information and copies of the proposed rule, please contact Mr. Paul 
Wilms, Director, Division of Environmental Management, P. O. Box 27687, Raleigh, NC 2761/, (919) 
733-7015. 



PROPOSED RULES 



1 he proposed effective date of this action is Fe- 
bruary 1, I9S9. 

1 he public hearing will be conducted at 9:30 
a.m. on November 14, 1988 at Securities Division, 
Department of Secretary of State, 300 N. Salis- 
bury St., Room 404, Raleigh, NC 2761 1. 

C- omment Procedures: Comments in the form 
of data, opinions, and arguments may be submit- 
ted to the Securities Di\'ision in writing prior to 
or orally at the hearing. 

CHAPTER 6 - SECURITIES DIVISION 

SECTION .1700 - REGISTRATION OF 

INVESTMENT ADVISERS AND INVESTMENT 

ADVISER REPRESENTATIVES 

.1701 DEFINITIONS 

For purposes of Sections .1700 and .1800 of 
these Rules, the following definitions shall apply: 

(1) "Act" shall mean the North CaroUna In- 
vestment Advisers Act, Chapter 78C of the 
North Carohna General Statutes, as may be 
amended from time to time; 

(2) "Dealer" shaU have the same meaning as 
that set forth in Section 78A-2(2) of the 
North Carolina General Statutes; and 

(3) "Salesman" shall have the same meaning 
as that set forth in Section 78 A- 2(9) of the 
North Carolina General Statutes. 

Statutory} Authority G.S. 78C-30(aJ. 

.1702 APPLICATION FOR INVESTMENT 
ADVISER REGISTRATION 

(a) The application for initial registration as an 
investment adviser pursuant to Section 78C- 17(a) 
of the Act shall be fded upon Form ADV (Uni- 
form Application for Investment Adviser Regis- 
tration) (17 C.F.R. 279.1) with the admimstrator. 
The initial application shall include the consent 
to service of process required by Section 
78C-46(b) of the Act, and shall mclude the fol- 
lowing: 

(1) A statement or certificate showing com- 
pliance by the investment adviser with the 
examination requirements of Rule .1709; 

(2) Such fmancial statements as set forth in 
Rule .1708, including at the time of ap- 
plication, a copy of the balance sheet for 
the last fiscal year, and if such balance 
sheet is as of a date more than 45 days 
from the date of filing of the application, 
an unaudited balance sheet prepared as set 
forth in Rule .1708; 



(3) Evidence of compliance with the mini- 
mum fmancial requirements of Rule 

.1704; 

(4) A copy of the surety bond required by 
Section 78C-17(e), if applicable; 

(5) The fee required by Section 78C- 17(b) of 
the Act; and 

(6) Any other information the administrator 
may from time to time require. 

(b) The application for renewal of registration 
as an investment adviser shall be fded on Form 
ADV-S (Armual Report for Investment Advisers 
Registered Under the Investment Advisers Act 
of 1940) (17 C.F.R. 279.3) and shall contain the 
following: 

(1) A copy of the surety bond required by 
Rule .1705, if applicable; and 

(2) The fee required by Section 78C- 17(b) of 
the Act. 

(c) The investment adviser shall fde with the 
administrator, as soon as practicable but in no 
event later than 30 days, notice of any civil, cri- 
minal or administrative charges filed against the 
investment adviser which relate directly or indi- 
rectly to its activities in the securities or financial 
ser\'ices business. This notice shall include no- 
tification of any investigation by any securities, 
commodities, or other fmancial services regula- 
tory agency and any disciplinary, injunctive, re- 
straining, or limiting action taken by such 
agencies, by any court of competent jurisdiction, 
or by any state administrator with respect to the 
investment adviser's activities in the securities or 
financial services business. Any amendment re- 
quired by Section 78C- 18(d) of the Act for an 
investment adviser shall be made on Form ADV 
in the manner prescribed by that form. Any 
amendment to Form ADV shall be fded with the 
administrator within the time period specified in 
the instructions to that form relating to filings 
made with the Securities and Exchange Com- 
mission. 

(d) Registration becomes effective at noon of 
the 30th day after a completed application is fded 
or such earlier time upon issuance of a license or 
written notice of effective registration, unless 
proceedings are instituted pursuant to G.S. 
78C-19. The administrator may be order defer 
the effective date after the filing of any amend- 
ment but no later than noon of the 30th day after 
the filing of the amendment. 

(c) Every investment adviser shall notify the 
administrator of any change of address, the 
opening or closing of any office (including the 
office of any investment adviser representative 
operating apart from the investment adviser's 
premises) or any material change thereto, in 
writing as soon as practicable. 



NORTH CAROLINA REGISTER 



657 



PROPOSED RULES 



(f) The registration of an investment adviser 
shall expire on December 3 1 of each year unless 
timely renewed. The application for renewal of 
registration should be filed at least 1 5 days before 
the expiration date. 

Statutory Authority G.S. 78C-I6(b); 78C-I7(a); 
7SC-I7(b): 78C-I7(e); 78C-I8(d); 78C-I9(a); 
7SC-30(a): 7SC-30(b): 7SC-30(c): 78C-30(d); 
7SC-46(b). 

.170.? Al'IM.IC.ATION [OR INVESTMENT 
.M)\ISKR KEPRF.SENTATINE 
REGIS IR.VnON 

(a) The application for initial registration as an 
investment adviser representative pursuant to 
Section 78(^-1 7(a) of the Act shall be filed upon 
I'orm L'-4 (Uniform Application for Securities 
Industry Registration or Transfer) with the ad- 
ministrator and contain the additional infonna- 
tion required by this Rule. The initial 
application shall include the consent to service 
of process required by Section 7SC-46(b) of the 
Act. The application for initial registration shall 
also provide the following: 

( 1 ) A statement or certificate showing com- 
pliance by the investment adviser repre- 
sentative with the examination 
requirements of Rule .1709; and 

(2) The fee required by Section 78C- 17(b) of 
the Act. 

(b) The application for renewal of registration 
as an investment ad\iser representative shall, un- 
less wai\ed by the administrator, be tiled with the 
administrator. No renewal of registration as an 
investment ad\iser representative shall be effected 
until the fee required by Section 78C- 17(b) of the 
Act is remitted to the administrator. 

(c) The in\estment ad\iser representati\'e or the 
investment adviser for which the in\estment ad- 
viser representative is registered shall file with the 
administrator, as soon as practicable but in no 
event later than 30 days, notice of any civil, cri- 
minal, or administrative charges tiled against the 
investment adviser representati\'e which relate 
directly or indirectly to his activities in the secu- 
rities or fmancial services business. This notice 
shall include notification of any investigation by 
any securities, commodities, or other financial 
ser\'ices regulator)' agency and any disciplinary, 
injunctive, restraining, or limiting action taken 
by such agencies, by any court of competent ju- 
risdiction, or by any state administrator with re- 
spect to the investment adviser representative's 
activities in the securities or financial services 
business. Any amendment required by Section 
78C-lS(d) of the Act for an investment adviser 
representative shall be made on Form 1-4 in the 



manner prescribed by that form. Such amended 
Form U-4 shall be filed with the administrator 
not later than 30 days following the event neces- 
sitating such amendment. 

(d) Registration becomes effective at noon of 
the 30th day after a completed application is fded 
or such earlier time upon approval of the appli- 
cation by the administrator, unless proceedings 
are instituted pursuant to G.S. 78C-19. The ad- 
ministrator may by order defer the effective date 
after the filing of any amendment but no later 
than noon of the 30th day after the filing of the 
amendment. 

(e) The registration of any investment adviser 
representative shall expire on December 31 of 
each year unless renewed in a timely fashion. 
The application for renewal of registration should 
be filed at least 15 days before the expiration 
date. The application for renewal of registration 
of investment adviser representatives shall be 
submitted by the investment adviser, who shall 
fde with the Securities Division a listing of all 
uivestment adviser representatives to be renewed 
along with their current addresses and social se- 
curity numbers. The investment advisers renewal 
list shaU be submitted in alphabetical order as 
follows: last name, first name, middle name or 
maiden name: current address: social security 
number. A fee of forty-five doUars ($45.00) for 
each investment adviser representative made 
payable to the North Carolina Secretary of State 
shall be submitted along with the investment ad- 
viser representative renewal Ust. 

Statutory Authority G.S. 78C-I6(b): 78C-I7(a); 
78C-I7(b): 78C-IS(d): ZSC-I9(a); 7SC-30fa); 
78C-30(b); 78C-46(b). 

.1704 MINIMLM FIN.\NCI.\I. REQUIREMENTS 
FOR INVESTMENT .ADMSERS 

(a) Unless an investment adviser posts a bond 
pursuant to Rule .1705, an investment adviser 
registered or required to be registered under the 
Act who has custody of client funds or securities 
shall maintain at all times a minimum net worth 
of thirty-five thousand dollars ($35,000.00), and 
every investment adviser registered or required to 
be registered under the Act who has discretionary 
authority over client funds or securities but does 
not have custody of client funds or securities shall 
maintain at all times a minimum net worth of ten 
thousand dollars ($10,000.00). 

(b) Unless otherwise exempted, as a condition 
of the riglit to continue to transact business in 
this state, every investment adviser registered or 
required to be registered under the Act shall by 
the close of business on the next business day 
notify the administrator if such investment ad- 



65S 



r\ORTH CAROLINA REGISTER 



PROPOSED RULES 



viscr's total net worth is less than the minimum 
required. After transmitting such notice, each 
investment adviser shall file by the close of busi- 
ness on the next business day a written report 
with the administrator of its financial condition, 
including the following: 

(1) A trial balance of all ledger accounts; 

(2) A statement of all client funds or securities 
which are not segregated; 

(3) A computation of the aggregate amount 
of client ledger debit balances; and 

(4) A statement as to the number of client 
accounts. 

(c) For purposes of this Rule, the term "net 
worth" shall mean an excess of assets over h- 
abilities, as determined by generally accepted ac- 
counting principles, but shall not include as 
assets: prepaid expenses (except as to items 
properly classified as current assets under gener- 
ally accepted accounting principles), deferred 
charges, goodwill, franchise rights, organizational 
expenses, patents, copyrights, marketing rights, 
unamortized debt discount and e.xpense, all other 
assets of intangible nature; home, home fur- 
nisliings, automobile(s), and any other personal 
items not readily marketable in the case of an 
individual; advances or loans to stockholders and 
officers in the case of a corporation; and advances 
or loans to partners in the case of a partnership. 

(d) The administrator may require that a cur- 
rent appraisal be submitted in order to establish 
the worth of any asset. 

Statutory Authority G.S. 78C-I7(d): 7SC-I8(c): 
78C- 18(d); 78C-30(a). 

.1705 BONDING REQUIREMENTS FOR 

CERTAIN INVESTMENT ADVISERS 

(a) Ever>' investment adviser having custody 
of or discretionary authority over client funds or 
securities shall be bonded in an amount of not 
less than thirty-five thousand dollars ($35,000.00) 
by a bonding company qualified to do business 
in this state or in Lieu thereof may provide evi- 
dence of a deposit of cash or securities in such 
amount. The requirements of this Rule shall not 
apply to those applicants or registrants who 
comply with the requirements of Rule .1704. 

(b) Should an investment adviser's bond be 
terminated by the surety resulting in the invest- 
ment adviser's failure to meet the requirements 
of Paragraph (a) of this Rule and the bond was 
not terminated due to fault of the investment 
adviser, then the investment adviser shall be 
provided a reasonable time period up to six 
months, without the necessity of ceasing to do 
business as an investment adviser, to obtain an- 
other bond in order to meet the requirements of 



Paragraph (a) of this Rule provided that the in- 
vestment adviser notifies the administrator in 
writing within two business days of the termi- 
nation of the bond and files such further infor- 
mation as the administrator may require 
regarding the fmancial status of the investment 
adviser until evidence of compliance with Para- 
graph (a) of this Rule is provided. 

(c) The surety bond shall be filed with the ad- 
ministrator on Form NCIAB (North Carolina 
Securities Division Investment Adviser's Bond) 
or on a form acceptable to the administrator. 
Evidence of a deposit of cash or securities shall 
be filed with the administrator on Form 
CDCS-IA (Certification of Deposit of Cash or 
Securities — Investment Advisers) or on a form 
acceptable to the administrator. 

Statutory Authority G.S. 78C-J7(d); 78C-I8(b): 
78C-J8(c); 78C-30(aJ. 

.1706 RECORD-KEEPING REQUIREMENTS 
FOR INVESTMENT ADVISERS 

(a) Every investment adviser registered or re- 
quired to be registered under the Act shall make 
and keep true, accurate and current the following 
books, ledgers and records: 

(1) A journal or journals, including cash re- 
ceipts and disbursements records, and any 
other records of original entr>' fonning the 
basis of entries in any ledger; 

(2) General and auxiliary ledgers (or other 
comparable records) reflecting asset, li- 
ability, reserve, capital, income and ex- 
pense accounts; 

(3) A memorandum of each order given by 
the investment adviser for the purchase 
or sale of any security, of any instruction 
received by the investment adviser from 
the client concerning the purchase, sale, 
receipt or delivery of a particular security, 
and of any modification or cancellation 
of any such order or instruction. Such 
memoranda shall show the terms and 
conditions of the order, instruction, mod- 
ification or cancellation; shall identify the 
person connected with the investment ad- 
viser who recommended the transaction 
to the client and the person who placed 
such order; and shall show the account for 
which entered, the date of entry, and the 
bank or dealer by or through whom exe- 
cuted where appropriate. Orders entered 
pursuant to the exercise of discretionary 
power shall be so designated; 

(4) All check books, bank statements, can- 
celled checks and cash reconciliations of 
the investment adviser; 



NORTH CAROLINA REGISTER 



659 



PROPOSED RULES 



(5) All bills or statements (or copies thereof), 
paid or unpaid, relating to the business of 
the investment adviser as such; 

(6) All tnal balances, financial statements, 
and internal audit working papers relating 
to the business of such investment adviser; 

(7) Originals of all written communications 
received and copies of all written com- 
munications sent by such investment ad- 
viser relating to: 

(A) Any recommendation made or pro- 
posed to be made and any advice given 
or proposed to be given, 

(B) Any receipt, disbursement or delivery 
of funds or securities, or 

(C) The placing or execution of any order 
to purchase or sell any security; provided, 
however, 

(i) that the in\estmcnt ad\iser shall not 
be required to keep any unsolicited 
market letters and other similar com- 
munications of general public distrib- 
ution not prepared by or for the 
investment adviser, and 

(ii) that if the investment adviser sends 
any notice, circular or other advertise- 
ment offering any report, analysis, pub- 
lication or other investment advisory 
service to more than ten persons, the 
investment adviser shall not be required 
to keep a record of the names and ad- 
dresses of the persons to whom it was 
sent; except that if such notice, circular 
or ad\crtisemcnt is distnbuted to per- 
sons named on any list, the investment 
adviser shall retain with the copy of 
such notice, circular or advertisement a 
memorandum describing the list and 
the source thereof; 

(8) A list or other record of all accounts in 
which the investment adviser is vested 
with any discretionary power with respect 
to the funds, securities or transactions of 
any client; 

(9) All powers of attorney and other evi- 
dences of the granting of any discretionary 
authority by any client to the investment 
adviser, or copies thereof; 

(10) /'Ml written agreements (or copies thereof) 
entered into by the investment adviser 
with any client or otherwise relating to the 
business of such investment adviser as 
such; 

(11) A copy of each notice, circular, adver- 
tisement, newspaper article, investment 
letter, bulletin or other communication 
recommending the purchase or sale of a 
specific security, which the investment 



adviser circulates or distributes, directly 
or indirectly, to ten or more persons 
(other than clients receiving investment 
supervisory services or persons connected 
with such investment adviser), and if such 
notice, circular, advertisement, newspaper 
article, investment letter, bulletin or other 
communication does not state the reasons 
for such recommendation, a memoran- 
dum of the investment adviser indicating 
the reasons thereof; 
(12) The following records: 

(A) A record of every transaction in a se- 
curity in which the investment adviser or 
any advisory representative of such in- 
vestment adviser has, or by reason of such 
transaction acquires, any direct or indirect 
beneficial ownership, except: 

(i) Transactions effected in any account 
over which neither the investment ad- 
viser nor any advisory representative of 
the investment adviser has any direct 
or indirect influence or control; and 

(ii) Transactions in securities which are 
direct obligations of the United States. 
Such record shall state the title and 
amount of the security involved; the 
date and nature of the transaction (i.e., 
purchase, sale or other acquisition or 
disposition); the price at which it was 
effected; and the name of the dealer or 
bank with or through whom the trans- 
action was effected. Such record may 
also contain a statement declaring that 
the reporting or recording of any such 
transaction shall not be construed as an 
admission that the investment adviser 
or advisor\' representative has any direct 
or indirect beneficial ownership in the 
security. A transaction shall be re- 
corded not later than ten days after the 
end of the calendar quarter in which the 
transaction was effected. 

(B) For purposes of this Subparagraph (12), 
the term "advisory representative" shall 
mean any partner, officer or director of 
the investment adviser; any employee who 
makes any recommendation, who partic- 
ipates in the determination of which re- 
commendation shall be made, or whose 
functions or duties relate to the determi- 
nation of which recommendation shall be 
made; any employee who, in connection 
with his duties, obtains any information 
concerning which securities are being re- 
commended prior to the effective dissem- 
ination of such recommendations or of 
the information concerning such rec- 



660 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



ommendations; and any of the following 
persons who obtain information concern- 
ing securities recommendations being 
made by such investment adviser prior to 
the effective dissemination of such rec- 
ommendations or of the information 
concerning such recommendations: 
(i) any person in a control relationship 

to the investment adviser, 
(ii) any affiliated person of such control- 
ling person, and 
(iii) any affiliated person of such affiliated 
person. 

"Control" shall have the same meaning 
as that set forth in Section 2(a)(9) of the 
Investment Company Act of 1940, as 
amended. 
(C) An investment adviser shall not be 
deemed to have violated the provisions of 
this Subparagraph ( 1 2) because of his fai- 
lure to record securities transactions of 
any advisory representative if he estab- 
lishes that he instituted adequate proce- 
dures and used reasonable diligence to 
obtain promptly reports of all transactions 
required to be recorded; 
(13) Records required of investment advisers 
primaiily engaged in other businesses; 
(A) Notwithstanding the provisions of 
Subparagraph (12) in this Rule, where the 
investment adviser is primarily engaged in 
a business or businesses other than advis- 
ing registered investment companies or 
other advisory clients, a record must be 
maintained of every transaction in a secu- 
rity in which the investment adviser or 
any advisory representative of such in- 
vestment adviser has, or by reason of such 
transaction acquires, any direct or indirect 
beneficial ownership, except: 
(i) Transactions effected in any account 
over which neither the investment ad- 
viser nor any advisory representative of 
the investment adviser has any direct 
or indirect influence or control; and 
(ii) Transactions in securities wliich are 
direct obligations of the United States. 
Such record shall state the title and 
amount of the security involved; the 
date and nature of the transaction (i.e., 
purchase, sale or other acquisition or 
disposition); the price at which it was 
effected; and the name of the dealer or 
bank with or through whom the trans- 
action was effected. Such record may 
also contain a statement declaring that 
the reporting or recording of any such 
transaction shall not be construed as an 



admission that the investment adviser 
or advisory representative has any direct 
or indirect beneficial ownership in the 
security. A transaction shall be re- 
corded not later than ten days after the 
end of the calendar quarter in which the 
transaction was effected. 

(B) An investment adviser is "primarily 
engaged in a business or businesses other 
than advising registered investment com- 
panies or other advisory clients" when, for 
each of its three most recent fiscal years 
or for the period of time since organiza- 
tion, whichever is lesser, the investment 
adviser derived, on an unconsolidated ba- 
sis, more than 50 percent of: 

(i) its total sales and revenues, and 
(ii) its income (or loss) before income 
taxes and extraordinary items, from 
such other business or businesses. 

(C) For purposes of this Subparagraph 
(13), the term "advisory representative", 
when used in connection with a company 
primarily engaged in a business or busi- 
nesses other than advising registered in- 
vestment companies or other advisory 
clients, shall mean any partner, officer, 
director or employee of the investment 
adviser who makes any recommendation, 
who participates in the determination of 
which recommendation shall be made, or 
whose functions or duties relate to the 
determination of which recommendation 
shall be made, or who, in connection with 
his duties, obtains any information con- 
cerning which securities are being recom- 
mended prior to the effective 
dissemination of such recommendations 
or of the information concerning such re- 
commendations; and any of the following 
persons who obtain information concern- 
ing securities recommendations being 
made by such investment adviser prior to 
the effective dissemination of such rec- 
ommendations or of the information 
concerning such recommendations: 

(i) any person in a control relationship 
to the investment adviser, 

(ii) any affdiated person of such control- 
ling person, and 

(ui) any affiliated person of such affiliated 
person. 

"Control" shall have the same meaning 
as that set forth in Section 2(a)(9) of the 
Investment Company Act of 1940, as 
amended. 

(D) An investment adviser shall not be 
deemed to have violated the provisions of 



NORTH CAROLINA REGISTER 



661 



PROPOSED RULES 



this Subparagraph (13) because of his fai- 
lure to record securities transactions of 
any advisory representative if he estab- 
lishes that he instituted adequate proce- 
dures and used reasonable diligence to 
obtain promptly reports of all transactions 
required to be recorded; and 
(14) A copy of each written statement and 
each amendment or revision thereof, given 
or sent to any client or prospective client 
of such investment adviser in accordance 
with the pro\isions of Rule .1707, and a 
record of the dates that each written 
statement, and each amendment or re- 
vision thereof, was given, or offered to be 
gi\en, to any client or prospective client 
who subsequently becomes a client. 

(b) If an investment adviser subject to Para- 
graph (a) of this Rule has custody or possession 
of securities or funds of any cHent, the records 
required to be made and kept under Paragraph 
(a) of this Rule shall also include: 

(1) A journal or other record showing aU 
purchases, sales, receipts and dehvenes of 
securities (including certificate numbers) 
for such accounts and all other debits and 
credits to such accounts; 

(2) .A separate ledger account for each such 
client showing all purchases, sales, receipts 
and deh\'eries of securities, the date and 
price of each such purchase and sale, and 
all debits and credits; 

(3) Copies of confirmations of all trans- 
actions effected by or for the account of 
any such client; and 

(4) A record for each security in which any 
such client has a position, which record 
shall show the name of each such chent 
ha\mg any interest in each security, the 
amount or interest of each such client, and 
the locations of each such security. 

(c) Evers' in\cstment ad\"iser subject to Para- 
graph (a) of this Rule who renders any invest- 
ment supervisory or management service to any 
client shall, with respect to the portfolio being 
supers ised or managed and to the extent that the 
information is reasonably a\'ailable to or obtain- 
able by the investment adsiser. make and keep 
true, accurate and current: 

(1) Records showing separately for each such 
client the securities purchased and sold, 
and the date, amount and price of each 
such purchase and sale; and 

(2) For each security in which any such client 
has a current position, information from 
which the in\estment adviser can 
promptly funiish the name of each such 



client, and the current amount or interest 
of such client. 

(d) Any books or records required by this Rule 
may be maintained by the investment adviser in 
such manner that the identity of any chent to 
whom such investment adviser renders invest- 
ment supervisory services is indicated by numer- 
ical or alphabetical code or some similar 
designation. 

(e) Duration requirement for maintenance of 
records: 

(1) All books and records required to be 
made under the provisions of Paragraphs 
(a) to (c)(1), inclusive, of this Rule shall 
be maintained and presened in an easily 
accessible place for a period of not less 
than five years from the end of the fiscal 
year during which the last entn," was made 
on such record, the first two years in an 
appropriate office of the in\estment ad- 
viser. 

(2) Partnership articles and any amendments 
thereto, articles of incorporation, charters, 
minute books, and stock certificate books 
of the investment adviser and of any pre- 
decessor, shall be maintained in the prin- 
cipal office of the investment adviser and 
preserved until at least three years after 
termination of the enterprise. 

(f) /Vn investment adviser subject to Paragraph 
(a) of this Rule, before ceasing to conduct or 
discontinuing business as an investment adviser, 
shall arrange for and be responsible for the pres- 
ersation of the books and records required to be 
maintained and preser\'ed under this Rule for the 
remainder of the period specified in this Rule, 
and shall notify the administrator in writing of 
the exact address where such books and records 
will be maintained during such period. 

(g) Preser%'ation and maintenance of records: 
(1) The records required to be maintained 

and preserved pursuant to this Rule may 
be immediately produced or reproduced 
by photograph on film or, as provided in 
Subparagraph (g)(2) of this Rule, on 
magnetic disk, tape or other computer 
storage medium, and be maintained and 
preserved for the required time in that 
form. If records are produced or re- 
produced by photographic film or com- 
puter storage medium, the investment 
adviser shall: 

(A) arrange the records and index the films 
or computer storage medium so as to 
permit the immediate location of any 
particular record; 

(B) be ready at all times to pro\ide, and 
promptly provide, any facsimile enlarge- 



662 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



ment of film or computer printout or 
copy of the computer storage medium 
which the administrator by its examiners 
or other representatives may request; 

(C) store separately from the original one 
other copy of the film or computer storage 
medium for the time required; 

(D) with respect to records stored on a 
computer storage medium, maintain pro- 
cedures for maintenance and preservations 
of, and access to, records from loss, alter- 
ation, or destruction; and 

(E) with respect to records stored on pho- 
tographic film, at all times have available 
for the administrator's examination of its 
records pursuant to Section 78C- 18(e) of 
the Act, facilities for immediate, easily 
readable projection of the film and for 
producing easily readable facsimile en- 
largements. 

(2) Pursuant to Subparagraph (g)(1) of this 
Rule an adviser may maintain and pre- 
serve on computer tape or disk or other 
computer storage medium records which, 
in the ordinary course of the adviser's bu- 
siness, are created by the adviser on elec- 
tronic media or are received by the adviser 
solely on electronic media or by electronic 
data transmission, 
(h) lor purposes of this Rule, "investment su- 
pervisory services" means the giving of contin- 
uous advice as to the investment of funds on the 
basis of the individual needs of each client. 

(i) Every registered investment adviser shall 
maintain within this state, in a readily accessible 
location, all records required by this Rule. A 
written request for the waiver of the provisions 
of this Section may be made to the administrator 
to pcnnit any registered investment adviser to 
maintain any of the records required by this Rule 
in some place other than the State of North Ca- 
rolina. In determining whether or not the pro- 
visions of this Rule should be waived, the 
administrator may consider, among other things, 
whether the main office of the investment adviser 
is in a place outside the State of North CaroUna 
or whether the investment adviser uses all or 
some of the bookkeeping facilities of some other 
investment adviser whose main office is outside 
the State of North Carolina. 

Statulorv Authoriiv G.S. 78C-I8(a); 7SC- 18(b); 
78C-I8(e); 7SC-30(a). 

MOl INVESTMENT ADVISER BROCHLRE 
RLLE 

(a) Unless otherwise provided in this Rule, an 
investment adviser, registered or required to be 



registered pursuant to Section 78C-16 of the Act, 
shall, in accordance with the provisions of this 
Rule, furnish each advisory client and prospec- 
tive advisory client with a written disclosure 
statement which may be a copy of Part II of its 
Form ADV or written documents containing at 
least the information then so required by Part II 
of Form ADV, or such other information as the 
administrator may require. 

(b) Deadline for dehvery of brochure: 

(1) An investment adviser, except as provided 
in Subparagraph (2), shall deliver the 
statement required by this Rule to an ad- 
visory client or prospective advisory ch- 
ent; 

(A) not less than 48 hours prior to entering 
into any investment advisory contract 
with such cUent or prospective cUent, or 

(B) at the time of entering into any such 
contract, if the advisory client has a right 
to terminate the contract without penalty 
within five business days after entering 
into the contract. 

(2) Delivery of the statement required by 
Subparagraph (1) need not be made in 
cormection with entering into: 

(A) an investment company contract, or 

(B) a contract for impersonal advisory ser- 
vices. 

(c) Requirement of delivery or offer to deliver 
brochure: 

(1) An investment adviser, except as provided 
in Subparagraph (2), shall annually, with- 
out charge, deliver or offer in writing to 
deliver upon written request to each of its 
advisory clients the statement required by 
this Rule. 

(2) The delivery or offer required by Sub- 
paragraph (1) need not be made to advi- 
sory clients receiving advisory services 
solely pursuant to: 

(A) an investment company contract, or 

(B) a contract for impersonal advisory ser- 
vices requiring a payment of less than two 
hundred doUars ($200.00). 

(3) With respect to an advisory client entering 
into a contract or receiving advisory ser- 
vices pursujmt to a contract for imper- 
sonal advisory services which requires a 
payment of two hundred dollars ($200.00) 
or more, an offer of the type specified in 
Subparagraph ( 1 ) shall also be made at 
the time of entering into an advisory con- 
tract. 

(4) Any statement requested in writing by an 
advisory cUent pursuant to an offer re- 
quired by this Paragraph must be mailed 



NORTH CAROLINA REGISTER 



663 



PROPOSED RULES 



or delivered within seven days of the re- 
ceipt of the request. 

(d) If an investment adviser renders substan- 
tially different types of investment advisory ser- 
vices to different advisory clients, any 
infomiation required by Part II of Form ADV 
may be omitted from the statement tumished to 
an advisory' chent or prospective advisory client 
if such information is applicable only to a type 
of in\'estment advisorv' service or fee which is not 
rendered or charged, or proposed to he rendered 
or charged, to that client or prospcctne client. 

(e) Nothing in this Rule shall relieve any in- 
vestment adviser from any obligation pursuant 
to any pro\ision of the Act or the rules and reg- 
ulations thereunder or other federal or state law 
to disclose any information to its ad\isor)' clients 
not specifically required by this Rule. 

(0 Definitions. For the purposes of this Rule: 

(1) "Contract for impersonal advisor>' ser- 
%ices" means any contract relating solely 
to the pro\ision of insestment advisor>' 
ser\'ices: 

(A) by means of written material or oral 
statements which do not purport to meet 
the objectixes or needs of specific indi\id- 
uals or accounts; 

(B) through the issuance of statistical in- 
formation containing no expression of 
opinion as to the investment merits of a 
particular security; or 

(C) by any combination of the foregoing 
ser\'ices: 

(2) "I-ntering into," in reference to an in- 
vestment advisor)' contract, does not in- 
clude an extension or renewal without 
material change of any such contract 
which is in effect immediately prior to 
such extension or renewal; and 

(3) "Investment company contract" means a 
contract with an investment company re- 
gistered under the Investment Company 
Act of 1941) which meets the requirements 
of Section 15(c) of that Act. 

Statutory- Auihoritv G.S. "SC-ISib); 7SC-30(a!: 
7SC-30(b). 

.1708 FINANC 1 M REPORTING 

RKQl IRKMENTS FOR 1N\ESTMENT 
VDMSERS 

(a) F-ser\" registered imestment adviser w ho has 
custody of client funds or securities or who re- 
quires payment of advisor.' fees six months or 
more in advance ;md in excess of fi\e hundred 
dollars ($500.00) per client shall file with the ad- 
ministrator an audited balance sheet as of the end 
of the in\'cstment adviser's fiscal vear. 



(1) Fach balance sheet filed pursuant to this 
Rule must be: 

(A) examined in accordance with generally 
accepted auditing standards and prepared 
in conformity with generally accepted ac- 
counting principles; 

(B) audited by an independent public ac- 
countant or an independent certified pub- 
he accountant; and 

(C) accompanied by an opinion of the ac- 
countant as to the report of fmancial po- 
sition, and by a note stating the principles 
used to prepare it, the basis of included 
securities, and any other explanations re- 
quired for clarity. 

(b) Every registered investment adviser who has 
discretionary authority over chent funds or secu- 
rities, but not custody, shall file with the admin- 
istrator a balance sheet, which need not be 
audited, but which must be prepared in accord- 
ance with generally accepted accounting princi- 
ples and represented by the in\'estment ad\iser 
or the person who prepared the statement as true 
and accurate, as of the end of the investment ad- 
visers fiscal year. 

(c) The fmancial statements required by this 
Rule shaU be filed with the administrator within 
90 days following the end of the investment ad- 
viser's fiscal year. 

Siatulorv Authority G.S. 7SC- 18(c); 7SC-30(a); 
''SC-30{c). 

.1709 EXAMINATION REQUIREMENTS FOR 
IN\ ESTMENT AD\ ISERS AND 
IN\ESrMENT ADMSER 
REPRESENTATIVES 

(a) Unless otherwise waived by the adminis- 
trator, an investment adviser shall take and pass 
the Uniform Investment Adviser State Law Ex- 
amination with a score of 70 percent or better 
and shall take and pass the Investment Adviser 
Practice Knowledge Examination with a score 
of 70 percent or better as a condition of registra- 
tion as an investment adviser. If the in\'estment 
adviser is not an individual, an officer (if the ap- 
plicant is a corporation) or a general partner (if 
the applicant is a partnership) shall take and pass 
these e.xaminations. 

(b) Unless otherwise waived by the adminis- 
trator, an investment adviser representative shall 
take and pass the I'niform Investment Ad%iser 
State Law Examination with a score of 70 per- 
cent or better and shall take and pass the Insest- 
ment Adviser Representative Practice 
Knowledge Examination with a score of 70 per- 
cent or better. 



664 



A O R TH CA R OLISA R ECUS TER 



PROPOSED RULES 



(c) Any person who was registered as an in- 
vestment adviser or investment adviser represen- 
tative in this state as of the effective date of these 
Rules shall not be required to take and pass the 
Uniform Investment Adviser State Law Exam- 
ination, the Investment Adviser Practice/ Know- 
ledge Examination, or the Investment Adviser 
Representative Practice/ Knowledge Examina- 
tion. 

(d) An applicant who has taken and passed the 
Uniform Investment Ad\iser State Law Exam- 
ination with a score of 70 percent or better within 
two years prior to the date the application is filed 
with the administrator, or at any time if the ap- 
plicant has not been inactive in the investment 
advisory business for more than two years when 
the application is filed, shall not be required to 
take and pass the L'niform Investment Adviser 
State Law Examination again. 

(e) Persons deemed to be investment ad\iscr 
representatives only because they solicit, offer or 
negotiate for the sale of or sell investment advi- 
sory services in this state shall not be required to 
take or pass a practice knowledge examination. 

Statutory Authority G.S. 7SC-I9(b){5): 
78C-30(a): 78C-30(b). 

.1710 TF.RMIN.VTION OR WITHDRAW AI OF 
INVESTMENT .\nMSER AND 
INVESTMENT ADVISER 
REPRESENTATIVE REGISTR.VTIONS 

(a) The application for withdrawal of registra- 
tion as an investment ad\iser pursuant to Section 
78C- 19(e) of the Act shall be fded upon Form 
ADV-W (Notice of Withdrawal from Registra- 
tion as Investment Adviser) (17 C.F.R. 279.2) 
with the administrator. Such filing shall be ac- 
companied by any outstanding investment ad- 
viser's license. Withdrawal shall not be effective 
until receipt by the administrator of any invest- 
ment adviser's license that may be outstanding. 
Investment advisers shall be held accountable for 
all acts until actual receipt of any outstanding b- 
cense by the administrator. Withdrawing invest- 
ment advisers shall comply with Paragraph (b) 
of this Rule with respect to each of their invest- 
ment adviser representations. 

(b) When an investment adviser representative 
withdraws, cancels, or otherwise terminates reg- 
istration, the application for termination or 
withdrawal of registration as an investment ad- 
viser representative shall be filed upon Form U-5 
(Uniform Termination Notice for Secunties In- 
dustry Registration) with the administrator by 
the investment adviser as soon as practicable after 
termination, but in no event later than ten busi- 



ness days after the investment adviser represen- 
tative terminates. 

Statutory Authority G.S. 78C-I6(b): 78C-I9(e); 
78C-30(a); 78C-30(b). 

.1711 TRANSFER OF INVESTMENT 
ADVISER REPRESENTATIVE'S 
REGISTR.\TION 

(a) In order to effect a transfer of registration 
of an investment adviser representati\e from one 
registered investment adviser (the "previous in- 
vestment adviser") to another registered invest- 
ment adviser (the "new investment adviser"), the 
administrator shall be provided the following in- 
formation: 

( 1) Uniform Termination Notice for Securities 
Industry Registration (Form U-5) to be 
provided by the previous investment ad- 
viser pursuant to the requirements of Rule 
.1710 of this Section; 

(2) Uniform Application for Securities and 
Commodities Industry Representative 
(Form U-4) to be provided by the new 
investment adviser, accompanied by a fee 
of forty-five dollars ($45.00) for issuance 
of the new registration, pursuant to the 
requirements of Rule .1703. 

(b) Ever)' registration of an investment adviser 
representative expires when the employment of 
the Investment adviser representative terminates 
until that investment adviser representative's reg- 
istration with a new investment adviser has been 
approved. 

Statutory Authority G.S. 78C-16(a): 78C-/6(b); 
78C-I7(a); 78C-I7{b); 78C-30(a); 78C-30(b). 

.1712 CHANGE OF NAME OF INVESTMENT 
ADVISER 

Where only a change in the name of the invest- 
ment adviser applicant or registrant occurs, an 
amended Form ADV or ADV-S shall be fded 
with the administrator together with any amend- 
ments to the organizational documents, or ac- 
companying letters of explanation, within 30 
days of the date of the change. The investment 
adviser shall return its license and a new license 
will be issued reflecting the name change. There 
will be no fee for reissuance of the Ucense. Each 
investment adviser representative shall retain his 
investment adviser representative's license and 
this license shall suffice as evidence of licensing 
under the new investment adviser name until re- 
newal. 

Statutory Authority G.S. 78C-/7(c); 78C-I8(d): 
78C-30(a); 78C-30(b). 



NORTH CAROLINA REGISTER 



665 



PROPOSED RULES 



.1713 INVKSTMENT ADVISER MERGER/ 
CONSOEIDATION/ACQLISITION/ 
SLCCESSION 

(a) When there is a merger, consolidation, ac- 
quisition, succession, or other fundamental 
change the sur%iving or new entity shall file with 
the administrator, prior to such fundamental 
change, an amended Form ADV or ADV-S or 
successor form, with the plan of fundamental 
change and a letter or any documents of expla- 
nation including the date of mass transfer of in- 
\estment ad\iscr representatives pursuant to 
Paragraph (c) of tlus Rule if contemplated. As 
soon as practicable, but not later than 30 days 
after the fundamental change, the sur\'iving or 
new entity shall file with the administrator the 
current financial statements of the sur\i\ing or 
new entity; the amended or new charter and by- 
laws; and. if applicable, a copy of the certificate 
of merger, consolidation or other fundamental 
change. 

(b) The registration of the surviving or new 
entity usually will be granted b\' the administra- 
tor on the same date that the fundamental change 
becomes etTccti\e. Where the fundamental 
change results in a change in the name of the 
sur\i\ing or new entity from the name listed on 
any outstanding investment ad\iser's license, the 
License shall be returned and a new license re- 
flecting the new name will be issued. There will 
be no fee for reissuance of a license. 

(c) Investment advisers shall effect mass trans- 
fers of investment ad\iser representati\"es by filing 
with the Securities Division a lorm L'-4 or suc- 
cessor form for each investment ad\iser repre- 
sentative to be transferred from the nonsurvi\ing 
entity to the survi\'ing or new entity and a Form 
1.-5 or successor form for each in\estment ad- 
viser representative not to be transferred. Fach 
transferred investment adviser representative shall 
retain his investment adviser representative's h- 
cense which shall suffice as evidence of registra- 
tion with the surviving or new entity until 
renewal. The transfer of the investment adviser 
representative is effective upon receipt of the 
Form U-4 or successor form by the Securities 
Di\'ision. /'VU Form U-5's or successor fonns 
shall be filed as soon as practicable but no later 
than ten business days after the fundamental 
change. There will be no fee for these transfers. 

Stattiton' Authority G.S. 7SC- 16(b); 7SC- 17(a); 
7SC-I7(ci: 7SC-I8(b); 78C-JS(c); 7SC-18(d); 
7SC-30(a); 7SC-30(b). 

.1714 REGISTR.\T10N OF PARTNERS/ 

EXECUTI\E OFFICERS/DIRECTORS 



(a) Any partner, executive officer, director, or 
a person occupying a similar status or perfonning 
similar functions who represents a registered in- 
vestment adviser in transacting business in this 
state as an investment adviser shall be registered 
as an investment adviser representative pursuant 
to Paragraph (b) of this Rule. 

(b) Automatic investment representative regis- 
tration for partners, executive officers or directors 
of a registered investment adviser or a person 
occupying a similar status or performing similar 
functions shall be obtained by filing an original 
or amended Form ADV or ADV-S and any ap- 
propriate schedule thereto, providmg the required 
disclosures regarding the registrant, and a written 
notice to the Securities Division identifying the 
registrant and that the registrant will engage in 
the activities as described in Paragraph (a) of this 
Rule; provided, however, if such iriformation is 
currently on fde with the administrator then the 
written notice only is required to be fded. Au- 
tomatic registration shall lapse where a material 
cl.dnge in the information reported on Form 
ADV or ADV-S or any schedule thereto regard- 
ing the registrant has occurred and has not been 
reported to the Securities Di\ision by filing an 
original or amended Form ADV or ADV-S or 
the appropnate schedule therewith current infor- 
mation within ten business days of the material 
change. The investment adviser shall timely in- 
fonn the Securities Division in writing when any 
registrant under this Paragraph ceases to engage 
in the activities described in Paragraph (a) of this 
Rule for the purposes of termination of the au- 
tomatic investment adviser representative regis- 
tration. Annual renewal is automatic upon 
renewal of the investment adviser registration. 

(c) Failure to maintain a current automatic re- 
gistration pursuant to Paragraph (b) of this Rule 
for those persons described in Paragraph (a) of 
this Rule may result in violation of G.S. 78C-16. 

(d) Automatic registration may be denied, re- 
voked, suspended, restricted or limited or the re- 
gistrant censured as provided by G.S. 78C-19. 
Nothing in this Rule shall limit the administra- 
tor s authority to institute administrative pro- 
ceedings against an investment adviser, or an 
applicant for investment adviser registration due 
to the qualifications of or disclosures regarding a 
person described in Paragraph (a) of this Rule. 

(e) An investment adviser representative shall 
not be registered with more than one investment 
ad\iser regardless of whether registration is ac- 
complished or contemplated under this Rule or 
Rule .1703 of this Section unless each of the in- 
\estment advisers which employs or associates 
the investment adviser representative is under 
common ownership or control. 



666 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



(f) For the purposes of this Rule, "Executive 
Officer" shall mean the chief executive officer, the 
president, the principal fmancial officer, each vice 
president with responsibility involving policy 
making functions for a significant aspect of the 
investment dealer's business, the secretary, the 
treasurer, or any other person performing similar 
functions with respect to any organization 
whether incorporated or unincorporated. 

Statutory Authority G.S. 78C-I6(a); 78C-I6(b); 
78C-I7(a): 78C-i8(b); 78C-I8(d): 78C-I9(a); 
78C-30(a); 78C-30(b). 

SECTION .1800 - MISCELLANEOUS 
PROVISIONS - INVESTMENT ADVISERS 

.1801 DISHONEST OR L'NETIIICAL 
PRACTICES 

(a) An investment adviser is a fiduciary and has 
a duty to act primarily for the benefit of its cli- 
ents. While the extent and nature of his duty 
varies according to the nature of the relationship 
between an investment adviser and its clients and 
the circumstances of each case, an investment 
adviser shall not engage in unethical business 
practices, including the following: 

(1) Recommending to a client to whom in- 
vestment supervisory, management or 
consulting services are provided the pur- 
chase, sale or exch;mge of any security 
without reasonable grounds to believe 
that the recommendation is suitable for 
the client on the basis of information fur- 
nished by the client after reasonable in- 
quiry' concerning the client's investment 
objectives, fmancial situation and needs, 
and any other information known or ac- 
quired by the investment adviser after 
reasonable examination of such of the cli- 
ent's financial records as may be provided 
to the investment adviser; 

(2) Placing an order to purchase or sell a se- 
curity for the account of a client without 
authority to do so; 

(3) Placing an order to purchase or sell a se- 
curity for the account of a client upon in- 
struction of a third party without first 
having obtained a written third-party 
trading authorization from the client; 

(4) Exercising any discretionary power in 
placing an order for the purchase or sale 
of securities for a cUent without obtaining 
written discretionary authority from the 
cUcnt within ten business days after the 
date of the first transaction placed pursu- 
ant to oral discretionary authority. Dis- 
cretionary power does not include a 



power relating solely to the price at which, 
or the time when, an order involving a 
definite amount of a specified security 
shall be executed, or both; 

(5) Inducing trading in a client's account that 
is excessive in size or frequency in view 
of the fmancial resources, investment ob- 
jectives and character of the account; 

(6) Borrowing money or securities from a 
chent unless the client is a dealer, an affil- 
iate of the investment adviser, or a fman- 
cial institution engaged in the business of 
lending funds or securities; 

(7) Lending money to a client unless the in- 
vestment adviser is a fmancial institution 
engaged in the business of lending funds 
or the client is an affiliate of the invest- 
ment adviser; 

(8) Misrepresenting to any advisory client, 
or prospective advisory client, the quali- 
fications of the investment adviser or any 
employee of the investment adviser, or 
misrepresenting the nature of the advisory 
services being offered or fees to be charged 
for such service, or omitting to state a 
material fact necessary to make the state- 
ments made regarding qualifications, ser- 
vices or fees, in light of the circumstances 
under which they are made, not mislead- 
ing; 

(9) Providing a report or recommendation to 
any advisory client prepared by someone 
other than the adviser without disclosing 
that fact. (This prohibition does not ap- 
ply to a situation in which the adviser uses 
published research reports or statistical 
analyses to render advice or where an ad- 
viser orders such a report in the normal 
course of providing service.); 

(10) Charging a client an advisory fee that is 
unreasonable in the light of the type of 
services to be provided, the experience and 
expertise of the adviser, the sophistication 
and bargaining power of the cUent, and 
whether the adviser has disclosed that 
lower fees for comparable services may be 
available from other sources; 

(11) Failing to disclose to a client in writing 
before entering into or renewing an advi- 
sory agreement with that client any mate- 
rial conflict of interest relating to the 
adviser or any of its employees which 
could reasonably be expected to impair 
the rendering of unbiased and objective 
advice including: 

(A) Compensation arrangements cormected 
with advisory services to cUcnts which are 



NORTH CAROLINA REGISTER 



667 



PROPOSED RULES 



in addition to compensation from such 
clients for such services; and 
(B) Charging a client an advisory fee for 
rendering advice when a commission for 
executing securities transactions pursuant 
to such advice will be received by the ad- 
viser or its employees; 

(12) CJuaranteeing a client that a specific result 
will be achieved (gain or no loss) as a re- 
sult of the advice which will be rendered; 

( 1 3 ) Publishing, circulating or distributing any 
ad\ertisement which does not comply 
with Rule 206(4)- 1 under the Investment 
Ad\'iscrs Act of 1940; 

(14) Disclosing the identity, affairs or invest- 
ments of any client to any third party un- 
less required by law to do so, or unless 
consented to by the client; 

(15) Taking any action, directly or indirectly, 
u ith respect to those secunties or funds in 
which any cUent has any beneficial inter- 
est, where the investment adviser has cus- 
tody or possession of such securities or 
funds when the adviser's action is subject 
to and does not comply with the safe- 
keeping requirements of Rule 206(4)-2 
under the Investment Advisers Act of 
i')4(l, unless the investment adviser is ex- 
empt from such requirements b\' virtue ot 
Rule 206(4)-2(b); 

(16) Entering into, extending or renewing any 
investment advisor,' contract, other than 
a contract for impersonal advisor}' ser- 
vices, unless such contract is m writing 
and discloses, in substance: the services to 
be provided; the term of the contract; the 
advisory fee or the formula for computing 
tiie fee; the amount or the manner of cal- 
culation of the amount of the prepaid fee 
to be returned in the event of contract 
termination or non-performance; whether 
the contract grants discretionary' power to 
the adviser; and that no assignment of 
such contract shall be made by the in- 
vestment adviser without the consent of 
the other party to the contract; and 

(17) Failing to disclose to any client or pro- 
spective client all material facts with re- 
spect to: 

(A) A fmancial condition of the adviser that 
is reasonably likely to impair the ability 
of the adviser to meet contractual com- 
mitments to clients, if the adviser has dis- 
cretionary authority (express or implied) 
or custody over such client's funds or se- 
curities, or requires prepayment of advi- 
sor,' fees of more than five hundred 



dollars ($500.00) from such client, six 
months or more in advance; or 
(B) A legal or disciplinary event that is 
materia] to an evaluation of the adviser's 
integrity or abihty to meet contractual 
commitments to clients. 
The conduct set forth in Rule .1801(a) is not in- 
clusive. It also includes employing any device, 
scheme, or artifice to defraud or engaging in any 
act, practice or course of business which operates 
or would operate as a fraud or deceit. 

(b) There shaJ] be a rebuttable presumption 
that the following legal or disciplinary events in- 
volving the adviser or a management person of 
the adviser (any of the foregoing being referred 
to hereafter as "person") that were not resolved 
in the person's favor or subsequently reversed, 
suspended, or vacated are material within the 
meaning of Subparagraph (a)(17)(B) of this Rule 
for a period of ten years from the time of the 
event: 

(1) A criminal or civil action in a court of 
competent jurisdiction in which the per- 
son: 

(A) was convicted, pleaded guilty or nolo 
contendere ("no contest") to a felony or 
misdemeanor, or is the named subject of 
a pending criminal proceeding (any of the 
foregoing referred to hereafter as 
"action"), and such action involved: an 
investment-related business, fraud, false 
statements, or omissions; wrongful taking 
of property; or bribery, forgery, counter- 
feiting, or extortion; 

(B) was found to have been involved in a 
violation of an investment-related statute 
or regulation; or 

(C) was the subject of any order, judgment, 
or decree permanently or temporarily en- 
joining the person from, or otherwise 
limiting the person from, engaging in any 
investment-related activity; 

(2) Administrative proceedings before the 
Administrator, Securities and Exchange 
Commission, any other federal regulatory 
agency or any other state agency (any of 
the foregoing being referred to hereafter 
as "agency") in which the person: 

(A) was found to have caused an invest- 
ment-related business to lose its authori- 
zation to do business; 

(B) was found to have been involved in a 
violation of an investment -related statute 
or regulation and was the subject of an 
order by the agency denying, suspending, 
or revoking the authorization of the per- 
son to act in, or barring or suspending the 
person's association with, an investment- 



66S 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



related business; or otherwise significantly 
limiting the person's investment-related 
activities; or 
(C) was found to have engaged in an act 
or a course of conduct which resulted in 
the issuance by the agency of an order to 
cease and desist the violation of the pro- 
visions of any investment-related statute 
or rule; or 
(3) Self- Regulatory Organization (SRO) 
proceedings in which the person: 

(A) was found to have caused an invest- 
ment-related business to lose its authori- 
zation to do business; or 

(B) was found to have been involved in a 
violation of the SRO's rules and was the 
subject of an order by the SRO barring 
or suspending the person from member- 
ship or from association with other mem- 
bers, or expelling the person from 
mcmbcrsliip; fining the person more than 
two thousand five hundred doUars 
($2,500.00); or otherwise significantly 
limiting the person's investment-related 
acti\itics. 

(c) The uifonnation required to be disclosed 
by Subparagraph (a)(17) shall be disclosed to 
clients promptly, and to prospecti\e clients not 
less than 48 hours prior to entering into any 
written or oral investment advisory' contract, or 
no later than the time of entering into such con- 
tract if the client has the nght to terminate the 
contract without penalty within five business 
days after entering into the contract. 

(d) For purposes of this Rule: 

(1) "\lanagement person" means a person 
with power to exercise, directly or indi- 
rectly, a controlling influence over the 
management or policies of an adviser 
which is a company or to determine the 
general investment advice given to clients; 

(2) "Found" means determined or ascer- 
tained by adjudication or consent in a fi- 
nal SRO proceeding, administrative 
proceeding, or court action; 

(3) "Investment-related" means pertaining to 
securities, commodities, banking, insur- 
ance, or real estate [including, but not 
limited to, acting as or being associated 
with a dealer, investment company, in- 
vestment adviser, government securities 
broker or dealer, municipal securities 
dealer, bank, savings and loan association, 
entity or person required to be registered 
under the Commodity Exchange Act (7 
U.S.C. 1 et seq.), or fiduciar>|; 

(4) "Involved" means acting or aiding, abet- 
ting, causing, counseling, commanding, 



inducing, conspiring with or failing rea- 
sonably to supervise another in doing an 
act; and 
(5) "Self- Regulatory Organization" or 

"SRO" means any national securities or 
commodities exchange, registered associ- 
ation, or registered clearing agency, 
(e) For purposes of calculating the ten-year 
period during which events are presumed to be 
material under Paragraph (b), the date of a re- 
portable event shall be the date on which the fi- 
nal order, judgment, or decree was entered, or the 
date on which any rights of appeal from prelimi- 
nary orders, judgments, or decrees lapsed. 

(0 CompUance with this Rule shall not reUeve 
any investment adviser from the obUgations of 
any other disclosure requirement under the Act, 
the rules and regulations thereunder, or under 
any other federal or state law. 

Statutory Authority G.S. 78C-/8(b); 78C-30(a). 

.1802 CUSTODY OF CLIENT FLNDS OR 
SECURITIES BY INVESTMENT 
ADVISERS 

(a) It shaU be unlawful for any investment ad- 
viser to take or have custody of any securities or 
funds of any client unless: 

(1) the investment adviser notifies the ad- 
ministrator in writing that the investment 
adviser has or may have custody. Such 
notification may be given on Form ADV; 

(2) the securities of each client are segregated; 

(3) the following conditions are satisfied: 

(A) all client funds are deposited in one or 
more bank accounts containing only cU- 
ents' funds, 

(B) such account or accounts are main- 
tained in the name of the Investment ad- 
viser as agent or trustee for such clients, 
and 

(C) the investment adviser maintains a se- 
parate record for each such account 
showing the name and address of the bank 
where the account is maintained, the dates 
and amounts of deposits in and with- 
drawals from the account, and the exact 
amount of each client's beneficial interest 
in the account; 

(4) immediately after accepting custody or 
possession of funds or securities from any 
client, the investment adviser notifies the 
client in writing of the place where and the 
manner in which the funds and securities 
will be maintained and subsequently, if 
and when there is a change in the place 
where or the manner in which the funds 
or securities are maintained, the invest- 



NORTH CAROLINA REGISTER 



669 



PROPOSED RULES 



ment adviser gi\cs written notice thereof 
to the client; 

(5) at least once every three months, the in- 
vestment adviser sends each such client an 
itemized statement showing the funds and 
secuntics in the imc^tment adviser's cus- 
tody at the end ot uch period and all de- 
bits, credits and transactions in the client's 
account during such period; and 

(6) at least once evcr>' calendar year, an in- 
dependent certified public accountant 
\crifies aU client funds and securities by 
actual examination at a time chosen by 
the accountant without prior notice to the 
investment ad\iscr. A report stating that 
such accountant has made an examination 
of such funds and securities, and describ- 
ing the nature and extent of the examina- 
tion, shall be filed with the administrator 
witlun 30 days ai~tcr each such examina- 
tion. 

(b) This Rule shall not apply to an in\estment 
adviser also registered as a broker-dealer under 
Section 13 of the Securities Exchange Act of 1934 
if the broker-dealer is: 

(1) Subject to and in compli;mce with SEC 
Rule 15c3-l (Net Capital Requirements 
for Brokers or Dealers), 17 C.E.R. 
240.15c3-l under the Securities I'xchange 
Act of 1934, or 

(2) A member of an exchange whose mem- 
bers are exempt from SEC Rule 15c3-l, 
17 C.E.R. 240.15c3-l under the pro- 
visions of Paragraph (b)(2) thereof and 
the broker-dealer is in compliance with all 
rules and settled practices of the exchange 
imposing requirements with respect to fi- 
nancial responsibility and the segregation 
of funds or securities carried for the ac- 
counts of customers. 

StatutofT Aui/ioritv G.S. 7SC-IS(a): ''SC-iS(b): 
7SC-30(a). 

.1803 AGENCY CROSS TRANS.\C1 IONS 

(a) For purposes of this Rule, "agency cross 
transaction for an advisorv' client" means a tran- 
saction in which a person acts as an investment 
adviser in relation to a transaction in which the 
investment adviser, or any person controlling, 
controlled by, or under common control with 
such in\estment ad\iser. including an investment 
adviser representative, acts as a dealer for both 
the advisor)' client and another person on the 
other side of the transaction. NVTien acting in 
such capacity such person is required to be reg- 
istered as a dealer in this state unless excluded 



from the defmition of "dealer" in N.C. Gen. Stat. 
Section 78A-2(2). 
(b) An investment adviser effecting an agency 
cross transaction for an advisory client shall be 
hi compliance vviih Section 78C-8(a)(3) of the 
Act if the foUowiiT conditions are met: 

(1) The advj 'iry client executes a written 
consent prospectively authorizing the in- 
vestment adviser to effect agency cross 
transactions for such cUent; 

(2) Before obtaining such written consent 
from the chent, the investment adviser 
makes full written disclosure to the client 
that, with respect to agency cross trans- 
actions, the investment adviser will act as 
dealer for, receive commissions from and 
have a potentially conflicting division of 
loyalties and responsibilities regarding 
both parties to the transactions; 

(3) At or before the completion of each 
agency cross transaction, the investment 
adviser or any other person relying on this 
Rule sends the client a written confirma- 
tion. The written confirmation shall in- 
clude: 

(A) a statement of the nature of the trans- 
action, 

(B) the date the transaction took place. 

(C) an offer to furnish, upon request, the 
time when the transaction took place, and 

(D) the source and amount of any other 
remuneration the investment adviser re- 
ceived or will receive in connection with 
the transaction. 

In the case of a purchase, if the investment 
adviser was not participating in a distrib- 
ution, or, in the case of a sale, if the in- 
vestment adviser was not participating in 
a tender offer, the written confirmation 
may state whether the investment adviser 
has been receiving or will receive any 
other remuneration and that the invest- 
ment ad\iser will furnish the source and 
amount of such remuneration to the client 
upon the client's written request; 

(4) At least armually, and with or as part of 
any written statement or summar\' of the 
account from the investment adviser, the 
investment adviser or any other person 
relying on this Rule sends the client a 
written disclosure statement identifying: 

(A) the total number of agency cross tran- 
sactions during the period for the client 
since the date of the last such statement 
or summary; and 

(B) the total amount of all commissions or 
other remuneration the investment adviser 
received or will receive in connection with 



670 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



agency cross transactions for the client 
during the period; 

(5) Each written disclosure and confirmation 
required by this Rule must include a con- 
spicuous statement that the client may 
revoke the written consent required under 
Subparagraph (b)(1) of this Rule at any 
time by providing written notice to the 
investment adviser; and 

(6) No agency cross transaction may be ef- 
fected in which the same investment ad- 
viser recommended the transaction to 
both any seller and any purchaser. 

(c) Nothing is this Rule shall be construed to 
relieve an Investment adviser or investment ad- 
viser representative from acting in the best inter- 
ests of the client, including fulfilling his duty with 
respect to the best price and execution for the 
particular transaction for the client nor shall it 
rcUcve any investment adviser representative of 
any other disclosure obligations imposed by the 
Act. 

Statutory Authoritv G.S. 78C-8(a); 78C-8(f); 
7SC-IS(b): 78C-3b(a). 

.1804 KXF.MPTION FROM SFXTION 
78C-8(aK3) FOR CERT.MN 
UROKKR-DEALERS 

(a) For purposes of this Rule: 

(1) "Publicly distributed written materials" 
means written materials which are distrib- 
uted to 35 or more persons who pay for 
those materials; and 

(2) "Pubhcly made oral statements" means 
oral statements made simultaneously to 
35 or more persons who pay for access to 
those statements. 

(b) An investment adviser registered as a 
broker-dealer pursuant to Section 1 5 of the Se- 
curities Exchange Act of 1934 shall be exempt 
from Section 78C-8(a)(3) of the Act in con- 
nection with any transaction in relation to which 
that broker-dealer acts as an investment adviser: 

(1) solely by means of publicly distributed 
written materials or publicly made oral 
statements; 

(2) solely by means of written materials or 
oral statements not purporting to meet the 
objectives or needs of specific individuals 
or accounts; 

(3) solely through the issuance of statistical 
information containing no expressions of 
opinion as to the investment merits of a 
particular security; or 

(4) any combination of the foregoing services. 
This exemption shaU apply only if the materials 
and oral statements disclose that, if the purchaser 



of the advisory communication uses the invest- 
ment adviser's services in cormection with the 
sale or purchase of a security which is a subject 
of the communication, the investment adviser 
may act as principal for its own account or as 
agent for another person. Compliance by the 
investment adviser with the foregoing disclosure 
requirement shall not relieve it of any other dis- 
closure obligations under the Act. 

Statutory Authority G.S. 78C-8(f): 78C-30(a). 

.1805 PERFORMANCE-BASED 

COMPENSATION EXEMPTION 

(a) For purposes of this Rule: 

(1) "Affiliate" shall have the same definition 
as in Section 2(a)(3) of the federal Invest- 
ment Company Act of 1940; 

(2) "Client's independent agent" means any 
person who agrees to act as an investment 
advisory client's agent in connection with 
the contract, but does not include: 

(A) The investment adviser reiving on this 
Rule; 

(B) An affiliated person of the investment 
adviser or an affiliated person of an affil- 
iated person of the investment adviser in- 
cluding an investment adviser 
representative; 

(C) An interested person of the investment 
adviser; 

(D) A person who receives, directly or in- 
directly, any compensation in connection 
with the contract from the investment ad- 
viser, an affiliated person of the invest- 
ment adviser, an affiliated person of an 
affiliated person of the investment adviser 
or an interested person of the investment 
adviser; or 

(E) A person with any material relationship 
between himself (or an affiliated person 
of that person) and the investment adviser 
(or an affiliated person of the investment 
adviser) that exists, or has existed at any 
time during the past two years; 

(3) "Company" means a corporation, part- 
nership, association, joint stock company, 
trust, or any organized group of persons, 
whether incorporated or not; or any re- 
ceiver, trustee in a case under Title 1 1 of 
the United States Code, or similar official 
or any liquidating agent for any of the 
foregoing, in his capacity as such. 
"Company" shall not include: 

(A) A company required to be registered 
under the federal Investment Company 
Act of 1940 but which is not so registered; 



NORTH CAROLINA REGISTER 



671 



PROPOSED RULES 



(B) A pri\'ate investment company (for 
puiposes of this Subparagraph (13), a pri- 
vate investment company is a company 
wliich would be defined as an in\cstment 
company under Section 3(a) of the federal 
Investment Company Act of 1940 but for 
the exception from that definition pro- 
vided by Section 3(c)(1) of that act): 

(C) An in\estment company registered un- 
der the federal ln\estment Company Act 
of 1041); or 

(D) A business de%'elopment company as 
defined in Section 2n2(a)(22) of the federal 
In\estment Company Ad\isers Act of 
194fi. unless each of the equity owners of 
an) such company, other than the in\est- 
ment adviser entering into the contract, is 
a natural person or company withm the 
meaning of Subparagraph (a)(3) of ;hi> 
Rule; and 

(4) "Interested person" means: 

(A) ,Ajny member of the unmediatc family 
of any natural person 'Aho is an aftlHatcd 
person of the investment adviser: 

(B) ;\n\' person who knowingly has any 
direct or indirect beneficial interest in, or 
who is designated as trustee, executor, or 
guardian of an\' legal interest in, any se- 
curity issued by the iinestment adviser or 
by a controlling person of the in\estmenl 
ad\iser if that beneficial or legal interest 
exceeds: 

(i) one tenth of one percent of any class 
of outstanding secunties of the m\'est- 
ment ad\'iser or a controlling person of 
the investment adviser; or 

(ii) five percent of the total assets of the 
person seeking to act as the client's in- 
dependent agent; or 

(C) Any person or partner or employee of 
any person who, at any time since the 
begiiming of the last two years, has actC'l 
as legal counsel for the investment adviser. 

(b) Notwithstanding Section 78C-8(c)(l) of the 
Act. an in\estment adviser may enter into, extend 
or renew an in\estment ad\isor>' contract wliich 
provides for compensation to the in\estmcnt ad- 
viser on the basis of a share of capital gains upon 
or capital appreciation of the funds, or any por- 
tion of the funds, of the client if the conditions 
in Subparagrapii- ic) through (h) of this Rule are 
met . 

(c) The client entering into the contract must 
be: 

(1) A natural person or a company who, im- 
mediately after entering into the contract 
has at least five hundred thousand doUars 



($500,000.00) under the management of 
the investment adviser; or 
(2) A person who the investment adviser and 
its in\estment adviser representatives rea- 
sonably believe, immediately before en- 
tering into the contract, is a natural person 
or a company whose net worth, at the 
time the contract is entered into, exceeds 
one nuUion dollars ($1,000,000.00). 
For purposes of this Rule, the term "net worth" 
shall ha'-e the same meaning as that provided bv 
Rule .1704(c). The net worth of a natural person 
may include assets held jointly with that person's 
spouse. 

(d) The compensation paid to the m\estment 
adviser with respect to the performance of any 
securities over a given period must be based on 
a tbrmula with the following characteristics: 

(1) In the case of securities for which market 
quotations are readily available within the 
meaning of Rule 2a-4(a)(r) under the In- 
vestment Company Act of 1940, (Defi- 
nition of "Current Net Asset Value" for 
Use in Computing Periodically the Cur- 
rent Price of Redeemable Securitv), 17 
C.F.R. 270.2a-4(a)(l). the formula must 
include the reali/.ed capital losses and un- 
realized capital depreciation of the securi- 
ties o\er the period; 

(2) In the case of securities for which market 
quota(ions are not readily a\'ailable within 
the meaning of Rule 2a-4(a)(l) under the 
Investment Companv Act of 1940, 17 
C.F.R. 270.2a-4(a)(lj, the formula must 
include: 

(A) the realized capital losses of securities 
over the period; and 

(B) if the unrealized capital appreciation of 
t!ie securities o\er the period is included, 
the unrealized capital depreciation of the 
sccurilies o\'er the period: and 

(3) 'I'he fonnula must provide that any com- 
pensation paid to the investment ad\iser 
under this Rule is based on the gains less 
the losses (computed in accordance with 
Subparagraphs (1) and (2) of this Para- 
graph) in the client's account for a period 
of not less than one year. 

(e) Before entering into the advisor.' contract 
and in addition to the requirements of Form 

\DV, the investment adviser must disclose in 
writing to the client or the client's independent 
agent all material information concerning the 
proposed advisor*' arrangement, including the 
following: 

( I ) That the fee arrangement may create an 
incenti\e for the investment adviser to 
make investments that are riskier or more 



672 



NORTH CAROLINA REGISTER 



PROPOSED RULES 



speculative than would be the case in the 
absence of a performance fee; 

(2) Where relevant, that the investment ad- 
viser may receive increased compensation 
with regard to unrealized appreciation as 
well as realized gains in the client's ac- 
count; 

(3) The periods which will be used to measure 
investment performance throughout the 
contract and their significance in the 
computation of the fee; 

(4) The nature of any index which will be used 
as a comparative measure of investment 
performance, the significance of the index, 
and the reason the investment adviser be- 
lieves that the index is appropriate; and 

(5) W'herc the investment adviser's compen- 
sation is based in part on the unrealized 
appreciation of securities for which mar- 
ket quotations are not readily available 
within the meaning of Rule 2a-4(a)(l) 
under the Investnncnt Company Act of 
1940, 17 C.F.R. 270.2a-4(a)(l), how the 
securities will be valued and the extent to 
which the valuation will be independently 
determined. 

(f) The investment adviser (and any investment 
adviser representative) who enters into the con- 
tract must reasonably believe, immediately before 
entering into the contract, that the contract re- 
presents an arm's length arrangement between 
the parties and that the client (or in the case of a 
client which is a company as defined in Subpar- 
agraph (a)(3) of this Rule, the person represent- 
ing the company), alone or together with the 
chent's independent agent, understands the pro- 
posed method of compensation and its risks. 
The representative of a company may be a part- 
ner, director, officer or an employee of the com- 
pany or the trustee, where the company is a trust, 
or any other person designated by the company 
or trustee, but must satisfy the definition of cli- 
ent's independent agent set forth in Subpara- 
graph (a)(2) of this Rule. 

(g) Any person entering into or performing an 
investment advisory contract under this Rule is 
not relieved of any obligations under Section 
78C-8(a) or any other applicable provision of the 
Act or any rule or order thereunder. 

(h) Nothing in this Rule shall relieve a client's 
independent agent from any obligation to the 
chent under applicable law. 

Statutory Authority G.S. 7SC-8(b); 78C-S(c)(i); 
78C-8(fJ; 78C-30(a). 

.1806 TR.WS.ACTIONS DEEMKD NOT TO BE 
.VSSIGNMENTS 



For purposes of Section 78C-8(c)(2) of the Act, 
a transaction which does not result in a change 
of actual control or management of an invest- 
ment adviser is not an assigrunent. 

Statutory Authority G.S. 78C-8(c)(2); 78C-8(fJ; 
78C-30(a). 

.1807 REQUEST FOR INTERPRETATIVE 
OPINIONS 

(a) Requests for interpretative opinions shall 
be directed to the administrator and shall contain 
the following: 

(1) Specific facts surrounding the proposed 
transaction in letter form with the identity 
of the persons involved; 

(2) The statutory and/or rule citation upon 
which the request is based; 

(3) Statement of the apphcant's requested in- 
terpretation supported by appropriate 
reasoning or justification and applicable 
case law or administrative opinions or de- 
cisions; 

(4) Any other relevant information or exhibits 
that the applicant desires the administra- 
tor to consider; and 

(5) A fee in the amount of one hundred fifty 
doUars ($150.00). 

(b) An interpretative opinion shall not be con- 
sidered an absolute exemption or exception from 
a definition. The burden of proving an ex- 
emption or exception from a definition shall re- 
main upon the person claiming it should the 
necessity of proof arise. 

(c) The administrator may, in his discretion, 
honor or deny requests for interpretative opin- 
ions. 

Statutory Authority G.S. 78C-30(a); 78C-3l(e). 

.1808 SUPERVISION OF INVESTMENT 
ADVISER REPRESENTATIVES 

(a) An investment adviser shall be responsible 
for the acts, practices, and conduct of its invest- 
ment adviser representatives in connection with 
advisory services until such time as the invest- 
ment adviser representatives have been properly 
terminated as provided by Rule .1710. 

(b) Every investment adviser shall exercise di- 
ligent supervision over the advisory acti\ities of 
all of its investment adviser representatives. 

(c) Every investment adviser representative 
employed by an investment adviser shall be sub- 
ject to the supen'ision of a supervisor designated 
by such investment adviser. The supervisor may 
be the investment adviser in the case of a sole 
proprietor, or a partner, officer, office manager 
or any quahfied investment adviser representative 



NORTH CAROLINA REGISTER 



673 



PROPOSED RULES 



in the case of entities other than sole proprietor- 
ships. 

(d) As part of its responsibility under this Rule, 
e\'er>' investment ad\iser shall establish, maintain 
and enforce written procedures, a copy of which 
shall be kept in each business otTice, which shall 
set forth the procedures adopted by the mvest- 
ment adviser, which shall include but not be 
limited to the tbllowing duties imposed bv this 
Rule: 

( 1 ) 1 he re\ iew and wntten approval by the 
designated supervisor of the openmg of 
each new client account; 

(2) The frequent examination of all client ac- 
counts to detect and prevent irregularities 
or abuses; 

(3) The prompt review and written apprrval 
by a designated supervisor of all advisory' 
transactions by investment adviser repre- 
sentatix'cs of all correspondence pertaining 
to the solicitation or execution of aU ad- 
visor, transactions by investment adviser 
representatives; 

(4) The prompt review and written appro\;d 
of the handling of all client complaints. 

(e) 1 \"cr\ investment adviser who has desig- 
nated more than one supervisor pursuai-it to 
Paragraph ic) of this Rule shall designate from 
among its partners, ofheers, or other qualified 
investment adviser representatives, a person or 
group of persons who shall: 

(1) Super\'ise and periodically review the ac- 
tivities of the super\"isors designated pur- 
suant to Paragraph (c) of this Rule: and 

(2) Periodically inspect each business office 
under his her supen.'ision to insure that 
the v^ ritten p^rocedures are being enforced. 

(f) The provisions of Paragraph (a) of this Rule 
shall be apphcable to an investment adviser who 
is also a dealer witliin the meaning of N.C. Gen 
Stat. §7SA-2(2) with respect to the acts, practices, 
and conduct of its salesmen (as that tenn is de- 
fined by N.C. Cien. Stat. Section 78A-2(9)i until 
such time as such salesmen are terminated pur- 
suant to the provisions of N.C. Gen. Stat. 
§78A-36(b) and IS NCAC 6 .1408. Every such 
investment adviser shall exercise diligent super- 
vision o\"er the acti\ities of its salesmen within 
the scope of their emplovment. 



Statulon' Aulhoritv 
7 SC- 30(a). 



G.S. 



7SC-J9(a;fi); 



.1809 I'l Hi.lC IMORMM ION 

Investment adviser records shall be classified as 
public i'lformalion except where: 



(1) The administrator lias determined that a 
claim or judicial action is in progress or a 
claim against or by the administrator may 
result in any judicial action or administrative 
proceeding; 

(2^ The administrator is conducting or has 
conducted a pnvate investigation pursuant 
to G.S. 78C-27; 

(3) The administrator has determined to con- 
duct an administrative hearing privately 
pursuant to G.S. 7SC-30(g); or 

(4' A statute, rule or order otherwise provides. 

Sia:utory Authority G.S. 78C-27fa); 78C-30(a); 
7SC-30{g); 78C-3/(c): 132-1; 132-1.1. 

.1X10 I ORM OF ( ONSFNT TO SERVICE 
OF PROCESS 

If the filing of a consent to service of process is 
required by statute or rule, the consent shall 
nrime the Secretar "I ^tate as service agent and 
shili be filed using the I niform Consent to Ser- 
vice of Process (Form L'-2) and if applicable, the 
Iniform Form of Corporate Resolution (Form 
i;-2A). Both Fonn I '-2 and Form U-2A shall 
be properly signed and acknowledged before a 
notarv'. 

Statutoty Aiuhorily G.S. 78C-30{a); 7SC-30(b); 
~SC-46ibl. 

.ISU FORMS 

For use in compliance w ith the requirements of 
the provisions of Chapter 7SC of the North Ca- 
rolina General Statutes and the rules promul- 
gated thereunder, the following forms are 
available upon request from the Secunties Divi- 
sion: 

( 1 ) Cniform AppUcation for Investment .Ad- 
viser Registration (Fomi ADV); 

(2) ^Annual Report for Investment .Advisers 
Registered Under the Investment Advisers 
Act of 1940 (Form ADV-S); 

(3) Uniform Consent to Service of Process 
(Fonn U-2); 

(4) Uniform Form of Corporate Resolution 
(Fonn U-2A); 

(5) Uniform Application for Securities Industry 
Registration or Transfer (Fonn U-4); 

(6) I'niform Termination Notice for Securities 
[ndustn, Registration (Form L'-5); 

(7) North Carolina Securities Division Invest- 
ment Adviser's Bond (Form NCIAB); and 

(S) Certification of Deposit of Cash or Securi- 
ties -- Investment Advisers (Form 

ct:)CS-ia). 

^.idtulofj Aiuhohiy G.S. ~SC-30(a); I'SC-SOib). 



6^4 



NORTH C A roll: A REGISTER 



LIST OF RUL ES A FFEC TED 



NORTH CAROLINA ADMrSISTRATIVE CODE 
EFFECTIVE: October I, 1988 



AGENCY 
DEPARTMENT OF ADMIMSTRATION 

1 NCAC 19B .0101 - .0103 

.0201 

.0301 - .0303 
30E .0101 - .0103 
.0201 - .0202 
.0301 - .0306 
.0401 - .0402 

DEPARTMENT OF ACRICUI.TI RE 

2 NCAC QL .1006 

22B .0002 

DEPARTMENT OF COMMERCE 
4 NCAC IE .0303 



BOARD OF ELECTIONS 

8 NCAC 8 

9 

GOVERNOR'S OFFICE 

9 NCAC 2 



.0004 
.0001 



.0005 



Executive Order Number 76 
Eff. September 14, 1988 
Executive Order Number 77 
Eff. September 14, 1988 



DEPARTMENT OF III MAN RESOLRCES 



10 



NCAC 8C 



14K 



14L 



14M 



.0901 
.1106 
.1204 
.0101 
.0201 
.0301 
.0304 
.0401 
.0101 
.0201 
.0301 
.0401 
.0501 
.0601 
.0701 
.0101 
.0201 
.0301 
.0401 



.0103 
.0218 
.0.302 
.0364 
.0408 
.0106 
.0203 
.0310 
.0407 
.0508 
.0613 
.0712 
,0113 
.0210 
.0304 
.0410 



ACTION TAKEN 



Adopted 
Adopted 
Adopted 
Adopted 
Adopted 
Adopted 
Adopted 



Amended 
Amended 



Temp. Amended 
Expires 03-14-89 



Adopted 
Adopted 



Amended 

Amended 

Amended 

Adopted 

Adopted 

Adopted 

Adopted 

Adopted 

Adopted 

Adopted 

Adopted 

Adopted 

Adopted 

Adopted 

Adopted 

Adopted 

Adopted 

Adopted 

Adopted 



NORTH CAROLINA REGISTER 



675 



LIST OF RULES AFFECTED 



.0501 - .0511 


Adopted 


.0601 - .0616 


Adopted 


.0701 - .0716 


Adopted 


14N .0101 - .0107 


Adopted 


.0201 - .0207 


Adopted 


.0301 - .0307 


Adopted 


.0401 - .0406 


Adopted 


.0501 - .0507 


Adopted 


.0601 - .0607 


Adopted 


.0701 - .0705 


Adopted 


.0801 - .0811 


Adopted 


140 .0101 - .0109 


Adopted 


.0201 - .0212 


Adopted 


.0301 - .0314 


Adopted 


.0401 - .0416 


Adopted 


.0501 - .0505 


Adopted 


.0601 - .0619 


Adopted 


181 .0120 


Amended 


18J .0408 - .0409 


Repealed 


.0602 


Amended 


.0709 


Amended 


.0712 


Amended 


18L .0333 - .0334 


Amended 


.0337 


Repealed 


.0338 


Amended 


.0429 


Amended 


.0432 


^\mended 


.0604 


Amended 


.0702 - .0703 


Amended 


.0705 - .0707 


Amended 


.0804 - .0809 


Amended 


.0903 - .0904 


7\mended 


.1002 


Amended 


.1004- .1006 


Amended 


.1102- .1107 


Amended 


.1202 


Repealed 


.1203- .1206 


Amended 


.1302- .1.305 


Amended 


.1402- .1403 


Amended 


18M .0506 


Amended 


.0607 - .0608 


Amended 


.0701 


Amended 


.0702 


Repealed 


.0704 


Amended 


.0801 - .0803 


Amended 


.0804- .0816 


Repealed 


.0819 - .0821 


Repealed 


.1201 - .1202 


Repealed 


180 .0104- .0123 


Repealed 


.0218 - .0227 


Repealed 


.0311 - .0321 


Repealed 


.0405- .0415 


Repealed 


.0638- .0651 


Repealed 


18P .0131 - .0143 


Repealed 


.0227 - .0244 


Repealed 


.0301 - .0313 


Repealed 


.0401 - .0407 


Repealed 


.0501 - .0508 


Repealed 


.0601 - .0603 


Repealed 



676 NORTH CAROLINA REGISTER 



LIST OF RULES AFFECTED 



.0701 - .0707 Repealed 

.0801 - .0807 Repealed 

.0904 Repealed 

18Q .0123 Amended 

.0124 Repealed 

.0 1 26 Amended 

.0284 Amended 

.0285 Repealed 

.0286 - .0287 Amended 

.0320 - .0334 Repealed 

.0421 - .0433 Repealed 

.0520 - .0521 Amended 

.0522 - .0537 Repealed 

.0538 - .0541 Amended 

.0601 -.0611 Repealed 

.0701 - .0708 Repealed 

.0802 - .0804 Amended 

.0806 Repealed 

.0808 Amended 

.0810 Amended 

.0812 Amended 

18R .0101 - .0109 Repealed 

.0201 - .0204 Repealed 

.0206 -.02 14 Repealed 

.0301 - .0306 Repealed 

.0401 - .0405 Repealed 

.0501 - .0504 Repealed 

.0601 - .0605 Repealed 

.0701 - .0702 Repealed 

.0801 - .0803 Repealed 

.0901 - .0902 Repealed 

.1001 - .1004 Repealed 

.1101 - .1106 Repealed 

.1201 - .1209 Repealed 

.1301 - .1302 Repealed 

.1401 - .1402 Repealed 

221- .0101 Amended 

.030 1 .'^mended 

22G .0209 Repealed 

.0307 Repealed 

.03 15 -.03 16 Adopted 

221 .0101 - .0122 Adopted 

.0201 Adopted 

45H .0119- .01.^3 Repealed 

nKPARTMFM Ol INSl R.WCK 

11 NCAC 1 .0403 Amended 

5 .0105 Amended 

.0403 - .0404 Adopted 

7 .0101 Amended 

.0105 Amended 

.0201 Amended 

.0202 - .0203 Repealed 

.0301 - .0302 Repealed 

.0303 - .0306 Amended 

nKPARTMtNT OF Jl STICK 



NOR TH CAROLINA REGIS TER 677 



LIST OF RULES AFFECTED 



12 NCAC 10 .0103 


Amended 


.0.302 


/^mended 


.1101 


Amended 


.1201 


Amended 


DH'AKIMKM OF NMl RAI RF.SOl RCKS 


AM) COMMIMTY nEVELOPMKNr 


15 NCAC 11 .0001 - .0003 


Adopted 


2A .0007 


Amended 


2B .0309 


Amended 


.0315 


Amended 


211 .1101 - .1111 


Adopted 


2J .0002 


Temp. Adopted 




Expires 03-08-89 


4C .0008 


Amended 


7H .0206 


Amended 


.0208 


/Vmended 


.0506 


Amended 


.0509 


Amended 


71 .0302 


Amended 


.0510 


.Amended 


7J .0206 -.0207 


.Amended 


.0209 


.Amended 


.0301 - .0302 


Amended 


.0305 - .0306 


Amended 


.0312 


.Amended 


.0401 


.Amended 


.0601 - .0603 


.Amended 


.0702 


.Amended 


7M .0402 


.Amended 


.0802 


.Amended 


12C .0315 


.-Amended 


13P ,0101 - .0104 


.Adopted 


.0201 - .0202 


.Adopted 


.0301 - .0303 


.Adopted 


.0401 - .0403 


.Adopted 


.0501 - .0505 


.Adopted 


.0601 - .0604 


.Adopted 


16C .0113 


Temp. .Adopted 




Expires 03-13-89 


16D .0201 


Temp, .Amended 




Expires 03-13-89 


DKI'ARTMENT OF RF\ FM F 




17 NCAC 7B .0803 


.Amended 


.1122 


.Amended 


.3502 


.-Amended 


.3505 


.Amended 


SFC RFT AR^ OF STATF 




18 NCAC 6 .1101 


.Amended 




1104 


.Amended 




1202- .1203 


.Amended 




1205- .1206 


.Amended 




1208- .1209 


.Amended 




1301 


.Amended 




1303- .1305 


.Amended 



678 



NORTH CAROLIXA REGISTER 



LIST OF RULES AFFECTED 



.1307- .1308 
.1310 
.1312 
.1313 
.1316 

.1317- .1318 
.1401 - .1402 
.1406- .1407 



.1409 
.1414 
.1504 
.1509 



.1410 



Amended 

Amended 

Repealed 

Amended 

Amended 

Adopted 

Amended 

Amended 

Amended 

Amended 

Amended 

Amended 



BOARD OF CERIIMFn PUBLIC ACCOINTANT EXAMINERS 



21 NCAC 8G .0305 - .0306 

.0406 



Amended 
Amended 



BOARD FOR CONTRACTORS 



21 



NCAf 12 



.0820 

.0822 - .0823 

.0825 

.0827 



.Adapted 
Adopted 
Adopted 
Adopted 



BOARD OF EXAMINERS OF ELECTRICAL CONTRACTORS 



21 NCAC 18A .1601 - 


.1607 


.1701 - 


.1703 


.1801 - 


.1812 


.1901 - 


.1910 


.2001 - 


.2004 


.2101 - 


.2103 


.2201 - 


.2211 


.2301 - 


.2308 


.2401 - 


.2403 


.2501 - 


.2502 


.2601 - 


.2613 


.2701 - 


.2704 


18B .0101 - 


.0109 


.0201 - 


.0211 


.0301 - 


.0307 


.0401 - 


.0407 


.0501 - 


.0505 


.0601 - 


.0602 


.0701 - 


.0705 


.0801 - 


.0810 


.0901 - 


.0906 


.1001 - 


.1004 


BOARD OF LANDSCAPE ARCHITECTS 


21 NCAC 26 .0203 




.0302 




MIDWIFERY JOINT COMMIITEE 




21 NCAC 33 .0001 




.0004 - 


.0005 



Repealed 
Repealed 
Repealed 
Repealed 
Repealed 
Repealed 
Repealed 
Repealed 
Repealed 
Repealed 
Repealed 
Repealed 
Adopted 
Adopted 
Adopted 
Adopted 
Adopted 
Adopted 
Adopted 
Adopted 
Adopted 
Adopted 



Amended 
Amended 



Amended 
Amended 



NORTH CAROLINA REGISTER 



679 



LIST OF RULES AFFECTED 



OFFICK OFSTATK PF.RSOWEI. 

25 NCAC ID .1401 Temp. Amended 

Expires 03-20-89 



6,S0 NORTH CAROLINA REGISTER 



NC AC INDEX 



ri ILE/MAJOR DIVISIONS OF THE NORTH CAROLINA ADMINISTRATIVE CODE 
TITLE DEPARTMENT 

1 Administration, Department of 

2 Agriculture, Department of 

3 Auditor, Department of State 

4 Commerce, Department of 

5 Corrections, Department of 

6 Council of State 

7 Cultural Resources, Department of 

8 Elections, State Board of 

9 Governor, Office of the 

10 Human Resources, Department of 

11 Insurance, Department of 

12 Justice, Department of 

13 Labor, Department of 

14A Crime (Control and Public Safety, Department of 

15 Natural Resources and Community Development, Department of 

16 Education, Department of 

17 Revenue, Department of 

18 Secretary of State, Department of 
19A Transportation, Department of 
20 Treasurer, Department of State 

*21 Occupational Licensing Boards 

22 Administrative Procedures 

23 Community Colleges, Department of 

24 Housing Finance Agency 

25 State Personnel, Office of 

26 Administrative Hearings, Office of 

NOTE: Title 21 contains the chapters of the various occupational licensing boards. 
CHAPTER LICENSINC; BOARDS 

2 Architecture, Board of 

4 Auctioneers, Commission for 

6 Barber Examiners, Board of 

8 Certified Public Accountant Examiners, Board of 

10 Chiropractic Examiners, Board of 

12 Contractors, 1 iccnsing Board for 

14 Cosmetic Art Examiners, Board of 

16 Dental Examiners, Board of 

18 Electrical Contractors, Board of Examiners of 

20 Eoresters, Board of Registration for 

21 Geologists, Board of 

22 I tearing Aid Dealers and Litters Board 
26 Landscape Architects, Licensing Board of 

28 landscape Contractors, Registration Board of 

31 Martial & Eamily Therapy Certification Board 

32 Medical Examiners, Board of 

33 Midwifery' Joint Committee 

34 Mortuary Science, Br)ard of 

36 Nursing, Board of 

37 Nursing Home Administrators, Board of 

38 Occupational Lherapists, Board of 
40 Opticians, Board of 

42 Optometry-, Board of Examiners in 



NOR TH CA ROLINA REGIS TER 681 



NC AC INDEX 



44 Osteopathic Examination and Registration, Board of 

46 Pharmacy, Board of 

48 Physical Therapy, Examining Committee of 

50 Plumbing and lleating Contractors, Board of 

52 Podiatry P^xaminers, Board of 

53 Practicing Counselors, Board of 

54 Practicing Psychologists, Board of 

56 Professional Engineers and Land Surveyors, Board of 

58 Real Estate Commission 

60 Refrigeration Examiners, Board of 

62 Sanitan;ui Examiners, Board of 

63 Social Work, Certification Board for 

64 Speech and Language Pathologists and 

Audiologists, Board of Examiners of 

66 Veterinary Medical Board 



6S2 NOR TH CA ROLINA REGIS TER 



CUMULA TIVE INDEX 



CUMULA TIVE INDEX 

(April 1988 - March 1989) 



1988 - 1989 

Pages Issue 

1 - 25 1 - April 

26 - 108 2 - April 

109 - 118 3 - May 

119 - 145 4 - May 

146 - 184 5 - June 

185 - 266 6 - June 

267 - 294 7 - July 

295 - 347 8 - July 

348 - 400 9 - August 

401 - 507 10 - August 

508 - 523 11 - September 

524 - 593 12 - September 

594 - 606 13 - October 

607 - 686 14 - October 



AO - Administrative Order 

AG - Attorney Generals Opinions 

C - Correction 

E - Errata 

EO - Executive Order 

EDI - Einal Decision Letters 

ER - Final Rule 

GS - General Statute 

JO - Judicial Orders or Decision 

ERA - List of Rules Affected 

M - Miscellaneous 

NP - Notice of Petitions 

PR - Proposed Rule 

SO - Statements of Organization 

TR - Temporary Rule 



ADMIMSTRATION 

Administrative Analysis Division, 447 PR 

Auxiliary Services, 270 PR 

Departmental Rules, 270 PR 

Human Relations Council, 609 PR 

State Construction, 187 PR 

Youth Advocacy and Involvement Office, 148 PR 

AD.MIMSIRATIVE HEARINGS 

General, 579 PR 

Hearings Division, 76 PR, 581 PR 

Rules Division, 580 PR 



NORTH CAROLINA REGISTER 



683 



CUMULA TIVE INDEX 



ADMIMS IR A TI\ E ORDKR 

Administrati\-c Order, 369 AO 

ACRICliriRE 

rood and Drua Protection Division, 271 PR 

N.C. Pesticide Bocird, 524 PR 

N.C. State Fair. 451 PR 

Plant Industn-. 453 PR 

Standards Division, 452 PR 

Stmctural Pest Control Committee, 296 PR 

COMMERCE 

.\lcoholic Beverage Control Commission, 276 PR 

Dep;irtmental Rules. 612 PR 

Milk Commission. 120 PR, 190 PR 

Seafood Industrial Park Authority, 613 PR 

COMMIAITY COEEEGES 

Community CoUcizes. 287 PR, 557 PR 

CORRECTION 

Di\ ision of Pnsons. 490 FR 

CRIME CONTROE AND PLBEIC SAFETY 

.Vlcohol I aw I'nforcement, 47 PR 

EEECTIONS 

State Board of Elections. 120 PR 



EXECl rn E ORDERS 

Fxecuti\e Orders 



68 - 


71. 1 


EO 




72, 119 


f:o 




73, 146 


EO 


74 - 


75, 50S 


EO 


76 - 


77, 594 


EO 



EINAE DECISION I ETI ERS 

Votini: Ridits Act. 5 FDL. 26 IDE. 185 FDL, 267 FDE, 295 I'DL, 370 FDL, 
401 FDL . 511 F'DF. 59^ FDE. 60S FDL 

GENERAL STAll TES 

Chapter 7A. 348 GS 
Chapter 143B. 350 GS 
Chapter 150B. 352 GS 

HUMAN RESOURCES 

Di\ision of Aging. 229 PR 

Dru2 Commission. 113 FR 

Facilitv Senices, 455 PR, 524 PR, 614 PR 

Health Ser\ices. 7 PR. 220 PR. 296 PR. 616 PR 

Medical Assistance. 7 PR. 30 PR, 109 PR, 121 PR, 237 PR, 303 PR, 461 PR 

Mental Health: General, 457 PR, 530 PR. 

Mental Health: Hospitals. 459 PR 

Mental Health: .Mental Retardation and Substance .Abuse Services. 629 PR 

.Mental Health: Other Programs, 530 PR, 

OtTice of the Secretary-. 31 PR 

Social Ser^■ices Commission. 27 PR, 531 PR 

Vocational Rehabilitation Ser\'ices, 371 PR 



6S4 NORTH CAROLINA REGISTER 



CUMULA TIVE INDEX 



rSDEPENDENT AGENCIES 

Housing Finance, 21 PR, 134 PR, 255 PR, 518 PR 

INSURANCE 

Agent Services Division, 238 PR, 636 PR 

Companv Operations Division, 470 PR 

Fire and Casualty Division, 32 PR, 461 PR 

Fire and Rescue Services Division, 122 PR, 149 PR 

Life; Accident and Health Division, 534 PR 

JISTICE 

Criminal Justice Education and Training Standards, 304 PR 
Private Protective Services, 303 PR 

LABOR 

Boiler and Pressure Vessel. 598 PR 

Flevator and Amusement Device Division, 599 PR 

Notice, 607 C 

OtTice of Occupational Safety and Health, 598 PR 

LICENSING BOARDS 

Cosmetic Ai\ Fxaminers, 2S3 PR, 473 PR 

CPA, 73 PR, 472 PR 

Examiners of Flectrical Contractors, 151 PR 

Hearina /XJd Dealers, 77 1-R 

Nursing, 376 PR, 477 PR 

Podiatry Examiners, 377 PR 

LIST OF Rl LLS AFFECTED 

Apnl 1, 1988, 102 I RA 
Mav 1, 1988, 137 I RA 
June 1. 19S8, 260 I RA 
July 1, 1988. 335 ERA 
August 1, 1988, 496 ERA 
Seplcmhcr 1, 1988, 585 ERA 
October 1, 1988, 675 ERA 

NATl RAL RESOURCES AND COM.MUNI IV DEVELOPMENT 

Coastal Management, 11 PR, 67 PR, 254 PR, 281 PR 
Commumty Assistance, 69 PR, 555 PR 
Division of Economic Opportunity, 556 PR 
Envu-onmental .Management, 241 PR, 278 I>R, 599 PR, 656 PR 
Forest Resources. 68 PR 
.Marine Eishcncs, 62 PR 
Sod and Water Conservation, 111 PR 

Wildlife Resources and Water Salety, 111 PR, 282 PR, 470 PR, 513 PR, 555 PR, 
599 PR, 656 PR 

RENENIE 

License and F-.xcise lax. 113 ER 

Motor Fuels Tax, 258 ER 

Sales and Use Taxes, 386 ER, 584 ER 

SECRETARY OF STATE 

Securities Division, 125 PR. 656 PR 

STATE PERSONNEL 

State Personnel Commission, 135 PR, 333 PR, 559 PR 



NORTH CAROLINA REGISTER 685 



CUMULA TIVE INDEX 



STAIE TRKASl RKR 

Escheats and Abandoned Property, 328 PR 
local Government Commission, 18 PR 
Retirement Systems, 513 PR 

STATEMEM S OE ORCiAMZATION 

Statements of Organization, 403 SO 

rRANSPORIATION 

Division of Motor Vehicles, 172 FR, 258 FR 



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